EXHIBIT 4.1
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RIGHTS AGREEMENT
by and between
AGREE REALTY CORPORATION
and
BANKBOSTON, N.A.
as
Rights Agent
Dated as of December 7, 1998
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This Agreement, dated as of December 7, 1998, is by and between Agree
Realty Corporation, a Maryland corporation (the "Company"), and BankBoston,
N.A., a national banking association (the "Rights Agent").
RECITAL
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common
Share (as such term is hereinafter defined) of the Company outstanding as of
the close of business on December 22, 1998 or such earlier date as may be
determined by the Board of Directors of the Company (the "Record Date"), each
Right representing the right to purchase one one-hundredth of a Preferred
Share (as such term is hereinafter defined), upon the terms and subject to
the conditions herein set forth, 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. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall hereafter become a Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) 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. Notwithstanding the foregoing, no Person shall be deemed to
have become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of Common
Shares outstanding, increases the proportionate number of Common
Shares beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding by reason of Common Share
purchases by the Company and shall, after such Common 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" as of the time of the acquisition of such
additional Common Shares by such 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
Section 1(a), has become such inadvertently, and such Person divests
(within such period as of the Board of Directors may deem
appropriate) a sufficient number of Common Shares so that such Person
is no longer an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not
be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Affiliates" shall have the meaning
ascribed to such terms in Rule l2b-2 promulgated under the Exchange
Act (as such term is hereinafter defined), as in effect on the date
of this Agreement.
(d) "Agreement" shall mean this agreement, as it may be
amended or supplemented from time to time pursuant to Section 27
hereof.
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(e) "Associate" and "Associates" shall have the meaning
ascribed to such terms in Rule l2b-2 promulgated under the Exchange
Act, as in effect on the date of this Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, as determined pursuant to Rule l3d-3 promulgated
under the Exchange Act;
(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, however, that a Person shall not (pursuant to this
Section 1(f)(ii)(A)) 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, however that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response
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to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act (as such term is
hereinafter defined) and (2) is not also then reportable on
Schedule 13D (or any comparable or successor report)
promulgated under the Exchange Act; 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 proviso to Section 1(f)(ii)(B) hereof) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of
the Company, shall mean 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.
(g) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in The Commonwealth of
Massachusetts are authorized or obligated by law or executive order
to close.
(h) "Close of Business" on any given date shall mean 5:00
P.M., Eastern time, time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Eastern
time, on the next succeeding Business Day.
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(i) "Common Share" and "Common Shares" when used with
reference to the Company shall mean, as applicable, one or more of
the shares of common stock, par value $0.0001 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean 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.
(j) "Company" shall have the meaning ascribed to such term in
the first paragraph of this Agreement.
(k) "Current per share market price" shall have the meaning
ascribed to such term in Section 11(d)(i) of this Agreement.
(l) "Distribution Date" shall have the meaning ascribed to
such term in Section 3 hereof
(m) "Equivalent preferred shares" shall have the meaning
ascribed to such term in Section 11(b) hereof
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(o) "Exchange Ratio" shall have the meaning ascribed to such
term in Section 24(a) hereof
(p) "Final Expiration Date" shall have the meaning ascribed to
such term in Section 7(a) hereof.
(q) "Flip-In Event" shall have the meaning ascribed to such
term in Section 11(a)(ii) hereof.
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(r) "Payment Date" shall mean December 22, 1998 or such
earlier date as may be determined by the Board of Directors of the
Company.
(s) "Person" and "Persons" shall mean any individual, firm,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity or entities.
(t) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.0001 per share, of the
Company having the rights and preferences set forth in the Form of
Articles Supplementary attached to this Agreement as Exhibit A.
(u) "Purchase Price" shall have the meaning ascribed to such
term in Section 4(a) hereof.
(v) "Record Date" shall be deemed to have the meaning ascribed
to such term in the Recital to this Agreement.
(w) "Redemption Date" shall have the meaning ascribed to such
term in Section 7(a) hereof.
(x) "Redemption Price" shall have the meaning ascribed to such
term in Section 23(a) hereof
(y) "Right" and "Rights" shall be deemed to have the meaning
ascribed to such terms in the Recital to this Agreement.
(z) "Right Certificate" shall be deemed to mean the form of
certificate evidencing the ownership of Rights in substantially the
form of Exhibit B hereto.
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(aa) "Rights Agent" shall be deemed to have the meaning
ascribed to such term in the first paragraph of this Agreement and
shall include any additional or substitute rights agents hereafter
appointed pursuant to the terms of this Agreement.
(bb) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(cc) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is beneficially owned, directly
or indirectly, by such Person.
(dd) "Summary of Rights" shall have the meaning ascribed to
such term in Subsection 3(b) hereof.
(ee) "Trading Day" and "Trading Days" shall have the meaning
ascribed to such terms in Section 11(d)(i) 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 (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares of the Company) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Board of Directors of the Company may, in
accordance with the provisions of Section 21 hereof, from time to time
appoint such substitute rights agents as it may deem necessary or desirable
upon ten (10) days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for,
the acts or omissions of any such co-Rights Agent.
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Section 3. Issuance of Right Certificates.
(a) One Right shall be associated with each Common Share
outstanding on the Record Date, each additional 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, and each additional Common Share with which Rights are issued
after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date; provided, however,
that, if the number of outstanding Rights are combined into a smaller
number of outstanding Rights pursuant to Section 11 hereof, the
appropriate fractional Right determined pursuant to such Section
shall thereafter be associated with each such Common Share.
(b) Until 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 the Board of Directors of the Company prior
to such time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common
Shares of the Company 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, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares of the Company 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 an Acquiring Person (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights;
the earlier of such dates being herein referred to as the
"Distribution Date"),
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(A) the Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for Common Shares of the
Company 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 (B) the right to receive Right
Certificates will be transferable only in connection with the
transfer of Common Shares of the Company. If the Distribution Date
would, pursuant to the foregoing provisions of this Section 3(b),
occur prior to the Payment Date (but for the provisions of this
sentence), the Distribution Date shall, notwithstanding the foregoing
provisions of this Section 3(b), not be deemed to occur until the
Payment Date.
As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign
and the Company (or the Rights Agent, if requested by the Company)
will send or cause to be sent by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares of the
Company as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right
Certificate evidencing one Right for each Common Share of the Company
so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares of the Company as of the close of
business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common
Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates
registered in the names
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of the holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares of the Company
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 of the Company represented
thereby.
(d) Certificates for Common Shares of the Company which become
outstanding (including, without limitation, certificates issued upon
the transfer of Common Shares of the Company and certificates
representing reacquired Common Shares of the Company referred to in
the last sentence of this Section 3(d)) 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 such certificates a legend in
substantially the following form:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Agree Realty Corporation and BankBoston, N.A., dated as of
December 7, 1998 (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 Agree
Realty Corporation. 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. Agree Realty Corporation 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 of the Company represented by such certificates shall
be evidenced by such certificates alone, and the
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surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares of the
Company represented thereby. In the event that the Company purchases
or acquires any of its 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 its
Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) 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 Board of
Directors of 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 or automated quotation system on which the Rights
may from time to time be listed or traded, or to conform to usage.
Subject to the provisions of Section 22 hereof, 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.
(b) Any Right Certificate issued pursuant hereto that
represents (i) Rights beneficially owned by an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) Rights
transferred to a transferee by an Acquiring Person (or of any such
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Associate or Affiliate) who becomes such a transferee after the
Acquiring Person becomes such or (iii) Rights transferred to a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes such a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has
any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of
the second paragraph of Section 11(a)(ii) hereof, and any Right
Certificate issued pursuant hereto upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
11(a)(ii) of such Rights Agreement.
In the case of a determination made pursuant to clause (iii)
of this Section 4(b) the Company shall notify the Rights Agent of
such determination.
Section 5. Countersignature and Registration. From and after the
distribution of Right Certificates pursuant to the second paragraph of
Section 3(a) hereof, (a) the Right Certificates shall be executed on behalf
of the Company by its Chairman of the Board, its President or any of its
Executive Vice Presidents, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof and shall be
attested by the Treasurer or an Assistant
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Treasurer, or Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature; (b) the Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned; (c) 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 thereof, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered 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 (d) 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 Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal 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 its face by each of the Right Certificates, the
certificate number of each Rights Certificates and the date of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the 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)
hereof or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates,
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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
Rights Agent's offices in Canton, Massachusetts. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificates until the registered
holder shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will 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.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Except as otherwise provided herein (including Section 24
hereof), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase
Price, at any time after the Distribution Date and at or prior to the
earliest of (i) the close of business on December 22, 2008 (the
"Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") and
(iii) the time at which such Rights are exchanged as provided in
Section 24 hereof, one one-hundredth of a Preferred Share, subject to
adjustment from time to time as provided in Section 11 or 13 hereof.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal 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, at or prior to
the earliest of (i) the close of business the Final Expiration Date,
(ii) the Redemption Date or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(c) The Purchase Price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall
initially be $70.00, and shall be subject to adjustment from time to
time as provided in Section 11 or 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
Section 7(d) below.
(d) 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
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for the shares to be purchased 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 by certified check,
cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Common Shares of the Company and/or
Preferred Shares certificates for the number of Common Shares of the
Company and/or Preferred Shares to be purchased and the Company
hereby irrevocably authorizes and directs 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 authorizes and 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 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of
such Right Certificate.
(e) 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 hereof.
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Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation, or, 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
the provisions of this Rights 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, or shall, at the
written request of the Company, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof 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 hereof. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares of the
Company and/or 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) In the event that there shall not be sufficient Preferred
Shares issued but not outstanding or authorized but unissued to
permit the exercise or exchange of Rights in accordance with Section
11 or 24 hereof, as the case may be, the Company covenants and
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agrees that it will take all such action as may be necessary to
authorize additional Preferred Shares for issuance upon the exercise
or exchange of Rights pursuant to Section 11 or 24 hereof, as the
case may be; provided, however, that if the Company is unable to
cause the authorization of additional Preferred Shares, then the
Company shall, or in lieu of seeking any such authorization, the
Company may, to the extent necessary and permitted by applicable law
and any agreements or instruments in effect prior to the Distribution
Date to which it is a party, (i) upon surrender of a Right, pay cash
equal to the Purchase Price in lieu of issuing Preferred Shares and
requiring payment therefor, (ii) upon due exercise of a Right and
payment of the Purchase Price for each Preferred Share as to which
such Right is exercised, issue equity securities having a value equal
to the value of the Preferred Shares which otherwise would have been
issuable pursuant to Section 11 or 24 hereof, which value shall be
determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company or (iii) upon due
exercise of a Right and payment of the Purchase Price for each
Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt
securities having an aggregate value equal to the value of the
Preferred Shares which otherwise would have been issuable pursuant to
Section 11 or 24 hereof, which value shall be determined by a
nationally recognized investment banking firm selected by the Board
of Directors of the Company. To the extent that any legal or
contractual restrictions (pursuant to agreements or instruments in
effect prior to the Distribution Date to which it is a party) prevent
the Company from paying the full amount payable in accordance with
the foregoing sentence, the Company shall pay to holders of the
Rights as to which such payments are being made all amounts
- 18 -
which are not then restricted on a pro rata basis as such payments
become permissible under such legal or contractual restrictions until
such payments have been paid in full.
(c) So long as the Common Shares of the Company and/or
Preferred Shares issuable and deliverable upon the exercise of the
Rights may be listed or traded on any national securities exchange or
automated quotation system, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
Common Shares of the Company and/or Preferred Shares reserved for
such issuance to be listed on such exchange or automated quotation
system upon official notice of issuance upon such exercise.
(d) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Flip-In Event, a registration statement under the Act
with respect to the securities purchasable upon exercise of the
Rights on an appropriate form and (ii) cause such registration
statement to become effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and
(B) the date of the expiration of the Rights. The Company will also
take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90)
days after the date set forth in clause (i) of the first sentence of
this Section 9(d), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become
effective. The Company will notify the Rights Agent of any such
suspension. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily
- 19 -
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the exercise thereof shall not be
permitted under applicable law.
(e) From and after the Distribution Date, 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 Common Shares of the Company and/or 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
Common Shares of the Company and/or 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 certificates or depositary receipts for Common Shares of the
Company and/or 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 Common Shares of the Company and/or Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares of the
- 20 -
Company and/or 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, however, that if the date of
such surrender and payment is a date upon which the transfer books of the
Company relating to the Common Shares of the Company and/or Preferred Shares
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 day
on which such transfer books are open.
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) In the event the Company shall at any time after
the date of this Agreement (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 on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time
- 21 -
when the Preferred Shares transfer books of the Company were
open, such Person would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be
in addition to and shall be made prior to any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement,
in the event any Person becomes an Acquiring Person (the
"Flip-In Event"), 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 (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 (B) dividing that
product by 50% of the then "current per share market price" of
the Common Shares of the Company on the date of the occurrence
of such event. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the
Company shall not, except as permitted by Section 23 hereof,
take any action which would eliminate or diminish
- 22 -
the benefits intended to be afforded by this Agreement or the
benefits intended to be afforded by the Rights.
From and after the occurrence of a Flip-In Event, any
Rights (1) that are or were acquired or beneficially owned by
any Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (2) transferred to a transferee by an
Acquiring Person (or of any such Associate or Affiliate) who
becomes such a transferee after the Acquiring Person becomes
such or (3) transferred to a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes such a
transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (x)
a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (y) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding
which has a primary purpose or effect the avoidance of this
second paragraph of Section 11(a)(ii) shall be void and any
holder and/or subsequent holder of such Rights shall
thereafter have no right to exercise such Rights under any
provision of this Agreement or to exercise any rights under
this Agreement with respect to such Rights. The Company shall
use all reasonable efforts to insure that the provisions of
this Section 11(a)(ii) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to
make any determination with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued
- 23 -
pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the second 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
second preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate
or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the second preceding sentence shall
be cancelled.
(iii) In the event that there shall not be sufficient
Common Shares of the Company issued but not outstanding or
authorized but unissued to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii) hereof (the
difference between the number of Common Shares of the Company
issuable upon the full exercise of the Rights and the actual
number of Common Shares available for issuance at such time
being referred to herein as the "Adjustment Shares"), the
Company shall, to the extent permitted by applicable law and
regulation: (A) determine the excess of (1) the value of the
Common Shares of the Company issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such
excess to be referred to hereinafter as the "Spread"), and (B)
with respect to each Right, make adequate provision to
substitute for the Common Shares of the Company, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors
- 24 -
of the Company has deemed to have the same value as the Common
Shares (such shares of preferred stock being referred to
herein as "common share equivalents")), (4) debt securities of
the Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value as determined by the Board of Directors of the Company;
provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (b)
above within 30 days following the first occurrence of a
Flip-In Event (the "Flip-In Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the
Company determines in good faith that it is likely that
sufficient additional Common Shares of the Company could be
authorized for issuance upon exercise in full of the Rights,
the 30-day period set forth above may be extended to the
extent necessary, but no to more than 120 days after the
Flip-In Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution
Period"). To the extent the Company determines that some
action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first
- 25 -
sentence and to determine the value thereof. In the event of
any such suspension, the Company shall deliver a notice to the
Rights Agent and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a notice to the Rights Agent and a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of
the Common Shares of the Company shall be the current per
share market price (as determined pursuant to Section 11(d)
hereof) of the Common Shares of the Company on the Flip-In
Trigger Date, and the value of any common share equivalent
shall be deemed to have the same value as the Common Shares of
the Company on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
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 substantially 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 which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered
(and/or
- 26 -
the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current per share 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, however, that in
no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one 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 of the Company, 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) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase
Price in effect immediately
- 27 -
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 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,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of
one 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)(i) For the purpose of any computation hereunder,
the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; provided,
however, that in the event that 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
- 28 -
such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the 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 the Security is not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the 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 the Security selected by the
Board of Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall
be determined in accordance with the
- 29 -
method set forth in Section 11(d)(i) hereof. 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 of
the Company as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common
Shares of the Company nor the Preferred Shares are publicly
held or so listed or traded, "current per share market price"
shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one 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(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other
shares
- 30 -
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 Sections 11(a) through (c) hereof,
inclusive, and the provisions of Sections 7, 9, 10 and 13 hereof with
respect to the Preferred Shares shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
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.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b)
and (c) hereof, 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 (A)
the number of one one-hundredths of a Preferred Share covered by a
Right immediately prior to this adjustment by (B) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
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
- 31 -
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 of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Distribution Date shall have occurred, shall
be at least 10 days later than the date of the public announcement.
If the Distribution Date shall have occurred, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 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.
- 32 -
(j) 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.
(k) 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.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the 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, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Board of Directors of 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
- 33 -
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 market price, 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) hereof, hereafter made by the Company to holders
of its Preferred Shares shall not be taxable to such stockholders
(n) In the event that 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 its Common Shares payable in Common
Shares of the Company or (ii) effect a subdivision, combination or
consolidation of its Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares of the Company) into a
greater or lesser number of its 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 of
the Company outstanding immediately before such event and the
denominator of which is the number of Common Shares of the Company
outstanding immediately after such event, and (B) each Common Share
of the Company outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common
Share of the Company outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this
Section 11(n) shall be made
- 34 -
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.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person, (ii) 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 of the Company 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 (iii) 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 (A) 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
- 35 -
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 Principal Party (as such
term is hereinafter defined) as shall equal the result obtained by
(1) 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 (2) 50% of the then current
per share market price of the Common Shares of the Principal Party
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (B) 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; (C) the term "Company" shall thereafter be deemed to
refer to such Principal Party; and (D) such Principal Party shall
take such steps (including, but not limited to, 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 and further providing that, as soon as practicable after
the date of any such consolidation, merger or sale of assets, the
issuer will:
(x) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will
use its best efforts to cause such registration statement to
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(1) become effective as soon as practicable after such filing
and (2) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration
Date; and
(y) deliver to holders of the Rights historical
financial statements for the issuer and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
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 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.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in clause
(i) or (ii) of the first sentence of Section 13(a) hereof, the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such transaction, or if
there is more than one issuer, the issuer of the Common Shares
with the greatest aggregate market value, and if no securities
are so issued, the Person that is the other party to such
transaction, or if there is more than one such Person, the
Person having Common Shares with the greatest aggregate market
value; and
(ii) In the case of any transaction described in clause
(iii) of the first sentence of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or
- 37 -
transactions; provided, however, that in any such case, (A) if
the Common Shares of such Person are not at such time and have
not been continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of any Person the
Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; and (B) in
case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common
Shares having the greatest aggregate market value.
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. The closing
price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect
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to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by
the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(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
- 39 -
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 (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares of the Company); and any registered holder of
any Right Certificate (or, prior to the Distribution Date, of the Common
Shares of the Company), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Distribution Date, of
the Common Shares of the Company), 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.
- 40 -
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 of the Company;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer;
(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 Share 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 in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of the
Company's or 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, however, the
- 41 -
Company must use its best 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 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without 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.
- 42 -
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 of the
Company or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or otherwise upon
the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
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
- 43 -
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.
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 the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Executive Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights
Agent; and such
- 44 -
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, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) 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 hereof, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares 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.
- 45 -
(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, the Chief
Executive Officer, the President, any Executive Vice President, the
Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions, in connection with its duties,
and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions.
(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.
- 46 -
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 of the Company or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Board of Directors of the Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' prior written notice,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares of the Company or Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of The Commonwealth
of Massachusetts (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 Michigan) in good standing, having an office in the State of
Michigan, 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
- 47 -
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.
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 its 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 of the Company may at its option,
at any time prior to the earlier of (i) the close of business on the
tenth Business Day following the date on which any Person becomes an
Acquiring Person (or if such date shall have occurred prior to the
Record Date, the close of business on the tenth Business Day
following the Record Date) or (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption
price of $.001 per Right, appropriately adjusted to reflect any stock
split,
- 48 -
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 of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors of the
Company in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to Section
23(a) hereof, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of
Directors of the Company 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 of the Company. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23 or
in Section 24 hereof and other than in connection with the purchase
of Common Shares prior to the Distribution Date.
- 49 -
Section 24. Exchange.
(a) The Board of Directors of the Company 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 of the
Company at an exchange ratio of one such 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 of the Company
shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary or any
entity holding Common Shares of the Company for or pursuant to the
terms of any such plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares of the Company then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to Section
24(a) hereof 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 of the Company equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the registry
- 50 -
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 of the Company for
Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares of the Company 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 of
the Company for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take all
such action as may be necessary to authorize such additional Common
Shares of the Company, the Company shall substitute, for each Common
Share of the Company 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 such Preferred Shares or
fraction thereof is equal to the current per share market price of
one Common Share of the Company as of the date of issuance of such
Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
its Common Shares or to distribute certificates which evidence
fractional Common Shares of the Company. In lieu of such fractional
Common Shares of the Company, the Company shall pay to the registered
holders of the Right Certificates with regard to which such
fractional Common Shares of the Company would otherwise be issuable
an amount in cash equal to the same
- 51 -
fraction of the current market value of a whole Common Share of the
Company. For the purposes of this Section 24(d), the current market
value of a whole Common Share of the Company shall be the closing
price of a Common Share of the Company (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section
24.
Section 25. Notice of Certain Events.
(a) If at any time subsequent to the Shares Acquisition Date,
the Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of the Preferred Shares or to make any other
distribution to the holders of the Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of the
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 the 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 of the Company payable in its Common Shares or to
effect a subdivision, combination or consolidation of the Common
Shares of the Company (by reclassification or otherwise than by
payment of dividends in its Common Shares), then, in each such case,
the Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date
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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 of the Company and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 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 date of the taking of such
proposed action or the date of participation therein by the holders
of the Common Shares of the Company and/or Preferred Shares,
whichever shall be the earlier.
(b) In case a Flip-In Event shall occur, then the Company
shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of
any Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
Agree Realty Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights
- 53 -
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:
BankBoston, N.A.
c/o EquiServe Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client 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 or the Rights Agent, as applicable.
Section 27. Supplements and Amendments. The Board of Directors of 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 Board of Directors of
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, however, 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 (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); and
provided further, however, that this Agreement may not be supplemented or
amended to lengthen (a) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable or (b) any other
time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
- 54 -
Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment; provided, however, that the Rights Agent may,
but shall not be obligated to, enter into any such supplement or amendment
which affects its own rights, duties or immunities under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made that (i) reduces the Redemption Price
(except as required hereunder by appropriate adjustment to reflect any stock
split, stock dividend or similar transaction occurring after the date of this
Agreement) or (ii) provides for an earlier Final Expiration Date.
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.
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 holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares of the
Company) any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares of the
Company).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
- 55 -
or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth day following the date of
such determination by the Board of Directors.
Section 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 Maryland 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.
Section 34. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (a)
interpret the provisions of this Agreement and (b) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend
this Agreement). All such actions, calculations, interpretations and
determinations (including, for the
- 56 -
purposes of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors of the Company in good faith
and in accordance with the provisions of this Agreement, shall (i) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
rights and all other parties, and (ii) not subject the Board to any liability
to the holder of the Rights.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above
written.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx Agree
------------------------ --------------------------
Xxxxxxx Xxxx Xxxxxxx Agree
Chief Financial Officer President
Attest: BANKBOSTON, N.A.
By: /s/ Xxxx Xxxx By: /s/ Xxxxxxxxx X. Xxxxxxxx
------------------------ --------------------------
Xxxx Xxxx Xxxxxxxxx X. Xxxxxxxx
Account Manager Administrative Manager
- 57 -
Exhibit A
FORM
OF
ARTICLES SUPPLEMENTARY CLASSIFYING
AND DESIGNATING A SERIES OF
PREFERRED STOCK AS SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
AND FIXING DISTRIBUTION AND
OTHER PREFERENCES AND RIGHTS OF SUCH SERIES
Agree Realty Corporation, a Maryland corporation, having its
principal office in the State of Maryland in the City of Baltimore (the
"Corporation"), hereby certifies to the State of Department of Assessments
and Taxation of Maryland that:
Pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation, as amended (the "Articles"), and Bylaws of the
Corporation, the Board of Directors adopted resolutions authorizing the
creation and issuance of a series of __________ shares of preferred stock,
par value $.0001 per share designated as "Series A Junior Participating
Preferred Stock" with preferences and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the shares of such series as follows:
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 _____________________ Thousand (______________).
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
A-1
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 $0.0001 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 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 (i) One
Dollar and No/100 ($1.00) or (ii) 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
A-2
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 (ii) 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 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock), provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(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
A-3
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 the
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. 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 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.
A-4
(b) Except as otherwise provided herein, in any other Articles
Supplementary 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;
A-5
(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 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
A-6
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or in any other Articles
Supplementary 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
A-7
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. 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 set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. 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.
A-8
Section 10. Amendment. The Articles 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 Designation is executed on
behalf of the Corporation by its President this _______ day of
______________, 1998.
AGREE REALTY CORPORATION
By:
--------------------
Xxxxxxx Agree
President
A-9
Exhibit B
Form of Right Certificate
Certificate No. R- ______ Rights
CUSIP ________
NOT EXERCISABLE AFTER ___________________, 2008, OR EARLIER IF
REDEEMED OR EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT PURSUANT TO WHICH THIS RIGHT CERTIFICATE HAS BEEN ISSUED.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS AND DEFINITIONS IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER WILL BECOME NULL AND VOID.
Right Certificate
AGREE REALTY CORPORATION
This certifies that ____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of __________________, 1998 (the "Rights
Agreement"), between Agree Realty Corporation, a Maryland corporation (the
"Company"), and, ____________________, N.A., _______________ (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, New York] time, on __________________, 2008, at the principal
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 $.0001 per share (the
"Preferred Shares"), of the Company, at a purchase price of $____________ 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
B-1
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 ________________, 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 principal office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor 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.
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 $.001 per Right or (ii) may be
B-2
exchanged in whole or in part for Preferred Shares or shares of the Company's
common stock, par value $0.0001 per share.
No fractional Preferred Shares or shares of the Company's common
stock will be issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions of Preferred Shares 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 or exchange 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.
B-3
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________________, 199__.
ATTEST: AGREE REALTY CORPORATION
_______________________________ ___________________________
Countersigned:
_______________________________
By
____________________________
Authorized Signature
B-4
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, address and taxpayer identification number or social
security number (as applicable) 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 a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
_____________________________________________________________________________
B-5
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-6
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: AGREE REALTY CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the securities issuable
upon the exercise of such Rights and requests that certificates for such
securities be issued in the name of:
Please insert social security or other identifying number
_____________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
The undersigned elects to purchase (check one) _______ Preferred Shares or
______ Common Shares of the Company.
Dated: _____________________ , ___
B-7
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
B-8
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.
In the event 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-9
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On __________________, 1998, the Board of Directors of Agree Realty
Corporation (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par
value $0.0001 per share (the "Common Shares"), of the Company. The dividend
is payable to all holders of record of Common Shares as of the close of
business on _____________________, 1998 (or such earlier date as may be
determined by the Board of Directors of the Company (the "Record 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 $0.0001 per share (the "Preferred Shares"), of the Company at a
price of $__________ 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 ____________________________________, 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") has acquired beneficial ownership of [15%] 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 of the Company prior to
such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement
C-1
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 [15%] or more of the outstanding Common Shares (the
earlier of such dates being called the "Distribution Date"), the Rights will
be evidenced by the certificates representing Common Shares 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 thereafter, such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on ______________, 2008 (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.
At any time following the Distribution Date, Rights (other than
Rights owned by an Acquiring Person and the Acquiring Person's affiliates and
associates, which will have become void)
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may be exercised (subject to their earlier termination, expiration or
exchange) to acquire, in lieu of Preferred Shares, at the then current
Purchase Price of the Right, that number of Common Shares (or if there are
insufficient Common Shares, Preferred Shares or fractions thereof) which at
such time will have a market value of two times the Purchase Price of the
Right.
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 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 equal to the greater of (i) One Dollar and No/100
($1.00) per share or (ii) 100 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preferred Shares will be
entitled to
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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, in 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.
In the event that 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 (other
than an Acquiring Person and the affiliates and associates of such Acquiring
Person, whose Rights will have become void) 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
Purchase Price of the Right. In the event that 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 or the affiliates and associates
of such Acquiring Persons (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 Purchase 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
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of Directors of the Company may exchange the Rights (other than Rights owned
by such person or group and their respective affiliates and associates 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% 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 or within 10 business days following the
acquisition by a person or group of affiliated or associated persons of
beneficial ownership of [15%] 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 $.001 per Right (the "Redemption Price"). The redemption
of the Rights may be made effective at such time on such basis with such
conditions as the Board of Directors of the Company 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 Board of Directors may supplement or amend the Rights Agreement
without the approval of the holders of Rights. From and after such time as
any person or group of affiliated or associated persons become an Acquiring
Person, the Rights Agreement may not be amended in any manner which would
adversely affect the interests of the holders of the Rights (other than the
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Acquiring Person or an affiliate or associated of an Acquiring Person). The
terms of the Rights may not be amended to (i) reduce the Redemption Price
(except as required by antidilution provisions) or (ii) provide for an
earlier Final Expiration Date.
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. Pursuant to the Rights Agreement,
certain actions (e.g. redeeming outstanding Rights, amending the Rights
Agreement. etc.) may only be made with the approval of the Board of Directors
of the Company.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. 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.
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