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RIGHTS AGREEMENT
between
CROSS-CONTINENT AUTO RETAILERS, INC.
and
THE BANK OF NEW YORK, as Rights Agent
Dated as of September 20, 1996
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions and Rules of Interpretation.......... 1
Section 2. Appointment of Rights Agent.............................. 4
Section 3. Issue of Right Certificates.............................. 4
Section 4. Form of Right Certificates............................... 5
Section 5. Countersignature and Registration........................ 6
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.............................. 6
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.............................................. 6
Section 8. Cancellation of Right Certificates....................... 7
Section 9. Availability of Preferred Shares......................... 7
Section 10. Preferred Shares Record Date............................. 8
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights.............................................. 8
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares................................................. 12
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power....................................... 13
Section 14. Fractional Rights and Fractional Shares.................. 13
Section 15. Rights of Action......................................... 13
Section 16. Agreement of Right Holders............................... 14
Section 17. Right Certificate Holder Not Deemed a Stockholder........ 15
Section 18. Concerning the Rights Agent.............................. 15
Section 19. Merger or Consolidation or Change of Name of
Rights Agent........................................... 15
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Section 20. Duties of Rights Agent................................... 15
Section 21. Change of Rights Agent................................... 17
Section 22. Issuance of New Right Certificates....................... 18
Section 23. Redemption............................................... 18
Section 24. Exchange................................................. 19
Section 25. Notice of Certain Events................................. 20
Section 26. Notices.................................................. 20
Section 27. Supplements and Amendments............................... 21
Section 28. Successors............................................... 21
Section 29. Benefits of this Agreement............................... 21
Section 30. Severability............................................. 21
Section 31. Governing Law............................................ 21
Section 32. Counterparts............................................. 22
Section 33. Descriptive Heading...................................... 22
Signatures............................................................ 23
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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Rights Agreement, dated as of September 20, 1996, between
Cross-Continent Auto Retailers, Inc., a Delaware corporation (the "Company"),
and The Bank of New York, a New York banking corporation, as rights agent
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each Common Share (as
hereinafter defined) of the Company outstanding on September 20, 1996, and
has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. (a) For purposes
of this Agreement, the following terms have the meanings indicated:
"Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
19.9% or more of the Common Shares of the Company then outstanding, but shall
not include the Company or any Company Entity. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of an acquisition
of Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned
by such Person to 19.9% or more of the Common Shares of the Company then
outstanding; PROVIDED, that if a Person shall become the Beneficial Owner of
19.9% or more of the Common Shares of the Company then outstanding by reason
of share purchases by the Company and shall, after such share purchases by
the Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph,
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
"Affiliate" has the meaning ascribed thereto in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
"Associate" has the meaning ascribed thereto in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of, to have
"Beneficial Ownership" of and to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), 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 or
exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; PROVIDED,
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 (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which 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 (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the
immediately preceding proviso) or disposing of any securities of the Company.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"close of business" on any given date means 5:00 p.m., New York City
time, on such date; PROVIDED, that if such date is not a Business Day it
shall mean 5:00 p.m., New York City time, on the next succeeding Business Day.
"Closing Price" for any day for any security means the last sale
price, regular way, for such security on such 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 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 the
security is listed or admitted to trading or, if such 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 Nasdaq or such other system
then in use, or, if on any such date such security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in such security selected by the
Board of Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors shall be used.
"Common Shares," when used with reference to the Company, means the
shares of common stock, par value $.01 per share, of the Company. "Common
Shares," when used with reference to any Person other than the Company, means
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
"Company Entity" means (i) any Subsidiary of the Company, (ii) any
employee benefit plan of the Company or any Subsidiary of the Company, (iii)
any entity holding Common Shares for or pursuant to the terms of any such
plan or (iv) any person or group of persons who, immediately prior to the
Record Date, beneficially owned 19.9% or more of the Common Shares then
outstanding.
"Current Per Share Market Price" of any security on any date means the
average of the daily Closing Prices per share of such security for the 30
consecutive Trading Days immediately prior
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to such date; PROVIDED, that (i) in the case of the Preferred Shares, if the
Preferred Shares are not publicly traded, the "Current Per Share Market
Price" of the Preferred Shares shall be conclusively deemed to be the Current
Per Share Market Price of the Common Shares (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement), multiplied by 100, (ii) in the case of the
Common Shares, if the Common Shares are not publicly held or so listed or
traded, the "Current Per Share Market Price" of the Common Shares means the
fair value per share as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent, and (iii) if the Current Per Share Market Price of the security is
determined during a period following the announcement by the issuer of such
security of (A) a dividend or distribution on such security payable in shares
of such security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such security and prior to
the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price of such security shall be appropriately adjusted to
reflect the current market price per share equivalent of such security.
"Distribution Date" means the earlier of (i) the tenth day after the
Shares Acquisition Date or (ii) 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 an Acquiring Person) after the date of the commencement by
any Person (other than the Company or any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan)
of, or of the first public announcement of the intention of any Person (other
than the Company or any Subsidiary of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) to commence, a tender
or exchange offer, the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 19.9% or more of
the then outstanding Common Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Expiration Date" has the meaning set forth in Section 7.
"Nasdaq" means the National Association of Securities Dealers, Inc.
Automated Quotations System.
"Person" means any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" means shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights
and preferences set forth in the Form of Certificate of Designations attached
to this Agreement as Exhibit A.
"Purchase Price" has the meaning set forth in Section 7(b).
"Record Date" means September 20, 1996.
"Redemption Date" has the meaning set forth in Section 7(a).
""Right" means a preferred share purchase right representing the right
to purchase (subject to adjustment pursuant to Section 11) one one-hundredth
of a Preferred Share upon the terms and subject to the conditions set forth
in this Agreement.
"Right Certificate" means a certificate substantially in the form of
Exhibit B.
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"Shares Acquisition Date" means the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become
such.
"Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
"then outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, means the number of such securities
then issued and outstanding together with the number of such securities not
then actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
"Trading Day" means, with respect to any security, a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business or, if such
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(b) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements
and amendments; (iv) a reference to a law includes any amendment or
modification to such law and any rules or regulations issued thereunder; (v)
a reference to a person includes its permitted successors and assigns; and
(vi) a reference in this Agreement to a Section, Exhibit or paragraph is to
the Section, Exhibit of paragraph of this Agreement.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights 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 10
days' prior written notice to the Rights Agent. The Rights Agent shall have
no duty to supervise, and shall in no event be liable for, the acts or
omissions of any such co-Rights Agent.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date, (i) the Rights will be evidenced by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be deemed to be Right Certificates) and not by separate Right Certificates,
and (ii) the right to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares. The Company shall give the
Rights Agent prompt written notice of the Distribution Date. Subject to
Section 11(a)(iii), as soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send, at the Company's expense) by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of business on
the Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate evidencing one Right for each Common Share
so held. As of the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, in substantially the form of
Exhibit C ( the "Summary of Rights"), by first-class, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the
Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates of Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together
with a copy of the Summary of Rights attached thereto. Until the earliest of
the Distribution Date, Redemption Date or Final Expiration Date, the
surrender for transfer of any certificate for Common
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Shares outstanding on the Record Date, with or without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares outstanding that become
outstanding (including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (b)) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Cross-Continent Auto Retailers, Inc.
and The Bank of New York, dated as of September 20,
1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of
Cross-Continent Auto Retailers, Inc. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Cross-Continent Auto Retailers, Inc. will mail to the
holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person (as defined in
the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced only by such certificates, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or
to conform to usage. The Rights Certificates shall be in a machine printable
format and, if not substantially in the form of Exhibit B hereto, in such
other form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 22, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a Preferred Share as
shall be set forth therein at the price per one one-hundredth of a Preferred
Share set forth therein (the "Purchase Price"), but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall be subject
to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, any Vice Chairman, its Chief Executive Officer, its President, any
of its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall
not be
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valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Agreement such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its designated office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on the face of 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 Section 14, at any time after the close of
business on the Distribution Date, and at or prior to the close of business
on the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) or that have been
exchanged pursuant to Section 24) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a
Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the designated office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to
the person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment by the holder
of a Rights Certificate of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon (i) receipt by the Company and the Rights Agent of (A)
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, (b) in case of loss, theft or destruction
of a Right Certificate, of indemnity or security reasonably satisfactory to
them, and (C) at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and (ii) upon
surrender to the Rights Agent and cancellation of the Right Certificate, if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and before the earliest of (i)
the close of business on the tenth annual anniversary of the Record Date (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date") or (iii) the time at which
such Rights are exchanged as provided in Section 24. The Rights shall be
exercised by and upon surrender of the Right Certificate evidencing such
Rights, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the designated office of the Rights
Agent, together with payment of the Purchase Price for each one one-hundredth
of a Preferred Share as to which the Rights are exercised.
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(b) The purchase price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be
$100.00, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof (such initial price, as the same may be adjusted,
being referred to as the "Purchase Price"). The Purchase Price shall be
payable in lawful money of the United States of America by certified check,
cashier's check or money order payable to the order of the Company.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased in accordance
with Section 7(b) 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, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests or (B)
requisition from the depositary agent depositary receipts representing such
number of one 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 the depositary agent) and the
Company hereby directs the 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 shares in accordance with Section 14 and,
after receipt, deliver such cash to or upon the order of the registered
holder of such Right Certificate and (iii) after receipt of such certificates
or depositary receipts referred to in clauses (i) and (ii) above, 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.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14.
Section 8. CANCELLATION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company.
Section 9. AVAILABILITY OF PREFERRED SHARES. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preferred Shares or any Preferred Shares held
in its treasury, the number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with
Section 7. The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(b) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any
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certificates or depositary receipts for Preferred Shares upon the exercise of
any Rights 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 reasonable satisfaction that
no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights
shall, for all purposes, be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, that if the date of such surrender and payment is
a date upon which the Preferred Shares transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Shares transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) If the Company shall at any time after the Record Date (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock 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),
except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable upon exercise of the Rights after
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; PROVIDED, that in no event
shall the consideration to be paid upon the exercise of any Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right.
(ii) Subject to Section 24 of this Agreement, if any Person becomes an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (y)
50% of the then Current Per Share Market Price of the Common Shares on the
date of the occurrence of such event.
(iii) If any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
Notwithstanding anything to the contrary set forth in this Agreement, from
and after the occurrence of such event, any Rights that are or were acquired
or beneficially owned by any Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under
-8-
any provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof. No Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate. Any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be void pursuant to
the preceding sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate shall be cancelled.
(iv) If there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) of this Section 11(a), the
Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights. In the
event the Company shall, after good faith effort, be unable to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exercise of a Right, a number of
Preferred Shares or fraction thereof such that the Current Per Share Market
Price of one Preferred Share multiplied by such number or fraction is equal
to the Current Per Share Market Price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then Current
Per Share Market Price of the Preferred Shares on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the 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 equivalent preferred shares so to be offered (and or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase at such current market price and the denominator of which
shall be the number of Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or equivalent preferred shares
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, that in no
event shall the consideration to be paid upon the exercise of any Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of such Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent. 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 shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for 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 continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Per Share Market Price of the
Preferred Shares on such record date, less the fair market
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value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such Current Per Share
Market Price of the Preferred Shares; PROVIDED, that in no event shall the
consideration to be paid upon the exercise of any Right be less than the
aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of such Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1.0% in the
Purchase Price; PROVIDED, that any adjustments which by reason of this
Section 11(d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share
or security as the case may be. Notwithstanding the first sentence of this
Section 11(d), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(e) 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 shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares contained in paragraphs (a) through (c),
inclusive, of Section 11, and the provisions of Sections 7, 9, 10 and 13 with
respect to the Preferred Shares shall apply on like terms to any such other
shares.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a Preferred Share purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(g) Unless the Company shall have exercised its election as provided
in Section 11(h), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-hundredths of a Preferred Share covered by a Right
immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share
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 one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement, with
substantially contemporaneous written notice to the Rights Agent, of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount
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of the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(h), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares at such adjusted Purchase Price.
(k) If an adjustment in the Purchase Price would be required to be
made effective as of a record date for a specified event in accordance with
this Section 11, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Preferred Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, that the Company shall deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring
such adjustment,
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred Shares,
issuance wholly for cash of any Preferred Shares at less than the Current Per
Share Market Price thereof, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares
or issuance of rights, options or warrants referred to in Section 11(b)
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(m) If at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding
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immediately before such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and (B) each Common
Share outstanding immediately after such event shall have issued with respect
to it that number of Rights which each Common Share outstanding immediately
prior to such event had issued with respect to it. The adjustments provided
for in this Section 11(m) shall be made successively whenever such a dividend
is declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained
and shall not be deemed to have knowledge of such adjustment unless and until
it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (a) the Company shall consolidate
with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property, or (c) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than the Company or
one or more of its wholly owned Subsidiaries, then, and in each such case,
proper provision shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which
a Right is then exercisable, in accordance with the terms of this Agreement
and in lieu of Preferred Shares, such number of Common Shares of such other
Person (including the Company as successor thereto or as the surviving
corporation) as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (B)
50% of the then Current Per Share Market Price of the Common Shares of such
other Person on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the issuer of such Common Shares 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
such issuer; and (iv) such issuer shall take such steps (including the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. Notwithstanding anything in this
Agreement to the contrary, the prior written consent of the Rights Agent must
be obtained in connection with any supplemental agreement that alters the
rights or duties of the Rights Agent, except that the substitution of another
party in place of the Company under this Agreement or the lowering of the
thresholds set forth in the definitions of "Acquiring Person" and
"Distribution Date" in accordance with Section 27 shall not be deemed to
alter the rights or duties of the Rights Agent hereunder. The Company shall
not enter into any transaction of the kind referred to in this Section 13 if
at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a
result of the consummation of such transaction, would
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eliminate or substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the Closing Price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions which 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
evidenced by depositary receipts, pursuant to an appropriate agreement
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 the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share. For the purposes of this
Section 14(b), the current market value of a Preferred Share shall be the
Closing Price of a Preferred Share for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance thereof expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided in Section 14(b)).
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18, are vested in the respective registered holders of the
Right Certificates and, prior to the Distribution Date, the registered
holders of the Common Shares. Any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares), without the
consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
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(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the
designated office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding anything to the contrary contained in this Agreement,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of the Company's or the Rights
Agent's inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such
obligation; provided that the Company shall use its reasonable efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon
as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent such compensation as shall be agreed in writing between
the Company and the Rights Agent for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any and all loss,
liability, damage, claim 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 in the premises. The provisions of
this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(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 Common Shares 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 and executed by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
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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 all
or substantially all the stock transfer or corporate trust powers of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto; PROVIDED,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned,
the Rights Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only the
duties and obligations expressly imposed by this Agreement and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent upon the following terms and conditions, by all of which the Company
and the holders of Rights, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choosing (who
may be legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
any Vice Chairman, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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, and all such statements and recitals are and shall be deemed to
have been made by the Company only.
-15-
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity
or execution of any Right Certificate (except its countersignature thereof);
nor shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall
it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(iii)) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after the Rights Agent's 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 to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable, nor shall the
Rights Agent be responsible for the legality of the terms hereof in its
capacity as an administrative agent.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, any Vice Chairman, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any
application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Agreement and
the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a proposal included in
such application on or after the date specified in such application (which
date shall not be less than three Business Days after the date any officer of
the Company actually receives such application, unless such officer shall
have consented in writing to any earlier date) unless prior to taking any
such action (or the effective date in the case of an omission), the Rights
Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other 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 reasonable care was exercised
in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties
-16-
hereunder or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase (as the case may be) has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
(l) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the
form of election to purchase attached hereto unless the Rights Agent shall
have actual knowledge that, as executed, such certification is untrue, or
(ii) the non-execution of such certification including, without limitation,
any refusal to honor any otherwise permissible assignment or election by
reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice of
any event or ownership of which the Company has knowledge that would prohibit
the exercise or transfer of the Right Certificates.
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 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the Rights Agent
or 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 an
office in the State of New York, which 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 which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares or 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.
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Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION. (a) The Board of Directors may, at its option,
at any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(a), and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice,
with substantially contemporaneous written notice to the Rights Agent, of any
such redemption; PROVIDED, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption of the
Rights, the Company shall mail a notice of redemption to all the holders of
the then outstanding Rights 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 Shares. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or in Section 24, and other
than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. EXCHANGE. (a) The Board of Directors may, at its option, at
any time after any Person becomes an Acquiring Person, 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 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company or any Company
Entity), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to Section 24(a) and without any further
action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be
to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice, with substantially contemporaneous written
notice to the Rights Agent, of any such exchange; PROVIDED, that the failure
to give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice 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 Shares for Rights
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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 11(a)(iii)) held by each holder of
Rights.
(c) If there shall not be sufficient Common Shares 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 Common Shares for
issuance upon exchange of the Rights. If the Company shall, after good faith
effort, be unable to authorize such additional Common Shares, the Company
shall substitute, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction thereof such
that the Current Per Share Market Price of one Preferred Share multiplied by
such number or fraction is equal to the Current Per Share Market Price of one
Common Share as of the date of issuance of such Preferred Shares or fraction
thereof.
(d) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Common Share.
For the purposes of this paragraph (d), the current market value of a whole
Common Share shall be the Closing Price of a Common Share for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders
of its Preferred Shares or to make any other distribution to the holders of
its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to
effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the
Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each such
case, the Company shall give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action.
Such notice shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed. Such notice shall be so given, in the case of any
action covered by clause (i) or (ii) above, at least 10 days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action and, in the case of any such other action, at least 10 days prior
to the earlier of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares or Preferred
Shares, as the case may be.
(b) If the event set forth in Section 11(a)(ii) shall occur, then the
Company shall as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 26, a notice
of the occurrence of such event, which notice shall describe such event and
the consequences of such event to holders of Rights under Section 11(a)(ii).
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
-19-
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as follows:
Cross-Continent Auto Retailers, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx
Subject to the provisions of Section 21 hereof, the designated office of the
Rights Agent shall be, and any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right Certificate
to or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed, (until another address is filed
in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Stock Transfer Administration
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. The Company may from time to
time supplement or amend this Agreement without the approval of any holders
of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; PROVIDED, that from and after
such time as any Person becomes an Acquiring Person, this Agreement shall not
be amended in any manner which would adversely affect the interests of the
holders of Rights. Without limiting the foregoing, the Company may at any
time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in the definitions of "Acquiring
Person" and "Distribution Date" in Section 1(a) to not less than the greater
of (i) the sum of .001% and the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any Person
(other than the Company or any Company Entity) and (ii) 10%. Notwithstanding
any other provision hereof, the Rights Agent's consent must be obtained
regarding any amendment or supplement pursuant to this Section 27 which
alters the Rights Agent's rights or duties, except that the substituting of
another party in place of the Company under this Agreement or the lowering of
the thresholds as aforesaid shall not be deemed to alter the rights or duties
of the Rights Agent hereunder.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns
hereunder. Upon the delivery of a certificate from an executive officer or
the secretary of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section, the Rights Agent
shall execute such supplement or amendment.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered
-20-
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
SECTION 31. 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 NEW YORK AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND
PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By
---------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By
---------------------------------
Name:
Title:
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EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CROSS-CONTINENT AUTO RETAILERS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------
Cross-Continent Auto Retailers, Inc., Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation as
required by Section 151 of the General Corporation Law by unanimous written
consent on September 3, 1996:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a series
of Preferred Stock, par value $ .01 per share (the "Preferred Stock"), of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 250,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $ .01 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends
A-1
payable in cash on the first day of March, June, September and December in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1 or (b) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, if no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the
Corporation. If the Corporation shall at any time declare or
A-2
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
A-3
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(A) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred
Stock shall have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (B) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. If the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator
A-4
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. RANK. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its Chairman of the Board and attested by its Secretary
this [___] day of September, 1996.
-------------------------------------
Chairman of the Board
Attest:
-------------------------------------
Secretary
A-5
EXHIBIT B
Form of Right Certificate
Certificate No. R- ______________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 20, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
CROSS-CONTINENT AUTO RETAILERS, 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, provisions and conditions
of the Rights Agreement, dated as of September 20, 1996 (the "Rights
Agreement"), between Cross-Continent Auto Retailers, Inc., a Delaware
corporation (the "Company"), and The Bank of New York, as rights agent (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 p.m.., (New York City time), on September 20, 2006 at the designated
office of the Rights Agent, or at the office of its successor as Rights
Agent, one one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, par value $ .01 per share (the
"Preferred Shares"), of the Company, at a purchase price of $100.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of September 20, 1996, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices
of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the designated office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
B-1
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price
of $.01 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value $.01 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________.
ATTEST: CROSS-CONTINENT AUTO RETAILERS, INC.
By
------------------------------------ --------------------------------
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
By
---------------------------------
Authorized Signatory
Date of authorization:
-------------
B-2
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto _____________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
------------------------------
---------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Rights Agent, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Rights Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
-------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
---------------------------------------
Signature
-------------------------------------------------------------------------------
B-3
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: CROSS-CONTINENT AUTO RETAILERS, INC.
The undersigned hereby irrevocably elects to exercise _____________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other taxpayer identifying number
-------------------------------------------------------------------------------
(Please print name and address),
-------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other taxpayer identifying number
-------------------------------------------------------------------------------
(Please print name and address),
-------------------------------------------------------------------------------
Dated:
-----------------------, ------
---------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Rights Agent, which requirements include
membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Rights Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
B-4
Form of Reverse Side of Right Certificate -- continued
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
--------------------------------------
Signature
-------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
If the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.
B-5
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On September 3, 1996, the Board of Directors of Cross-Continent Auto
Retailers, Inc. (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par
value $.01 per share (the "Common Shares"), of the Company. The dividend is
payable on September 20, 1996 (the "Record Date") to the stockholders of
record on that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $100 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and The Bank of New York as rights
agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 19.9% or more of
the outstanding Common Shares or (ii) 10 business days (or such later date as
may be determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 19.9% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 20, 2006 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed
or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion
price, less than the then-current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular
C-1
periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will have 100 votes, voting together with
the Common Shares. Finally, it the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per Common Share.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares, dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
If the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are
sold after a person or group has become an Acquiring Person, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which
at the time of such transaction will have a market value of two times the
exercise price of the Right. If any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by
the Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group, which will have
become void), in whole or in part, at an exchange ratio of one Common Share,
or one one-hundredth of a Preferred Share (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1.0%
in such Purchase Price.
No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Company, be evidenced by depositary receipts) and
in lieu thereof, an adjustment in cash will be made based on the market price
of the Preferred Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group
of affiliated or associated persons of beneficial ownership of 19.9% or more
of the outstanding Common Shares, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective
at such time on such
C-2
basis with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known to the Company to be beneficially owned by any
person or group of affiliated or associated persons and (ii) 10%, except that
from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely affect
the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. A copy of the Rights Agreement has
been filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on S-1, No. 333-06585.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
C-3
