1
================================================================================
METROCALL, INC.
AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 25, 2000
================================================================================
2
TABLE OF CONTENTS
PAGE
----
Section 1. Certain Definitions............................................ 1
Section 2. Appointment of Rights Agent.................................... 4
Section 3. Issue of Right Certificates.................................... 4
Section 4. Form of Right Certificates..................................... 6
Section 5. Countersignature and Registration.............................. 6
Section 6. Transfer, Split Ups Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates................................................... 6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights; Nullification of Rights............................... 7
Section 8. Cancellation and Destruction of Right Certificates............. 9
Section 9. Reservation and Availability of Preferred Shares............... 9
Section 10. Preferred Shares Record Date................................... 10
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights...................................................... 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..... 18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................. 18
Section 14. Fractional Rights and Fractional Shares........................ 19
Section 15. Rights of Action............................................... 21
Section 16. Agreement of Right Holders..................................... 21
Section 17. Right Certificate Holder Not Deemed a Stockholder.............. 21
Section 18. Concerning the Rights Agent.................................... 22
Section 19. Merger or Consolidation or Change of Name of Rights Agent...... 22
Section 20. Duties of Rights Agent......................................... 23
Section 21. Change of Rights Agent......................................... 24
Section 22. Issuance of New Right Certificates............................. 25
Section 23. Redemption..................................................... 25
Section 24. Notice of Certain Events....................................... 26
Section 25. Notices........................................................ 27
Section 26. Supplements and Amendments..................................... 28
Section 27. Exchange....................................................... 28
Section 28. Determinations and Actions by the Board of Directors, Etc...... 30
Section 29. Successors..................................................... 30
Section 30. Benefits of this Agreement..................................... 30
Section 31. Severability................................................... 30
Section 32. Governing Law.................................................. 31
Section 33. Counterparts................................................... 31
Section 34. Descriptive Headings........................................... 31
i
3
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement"), dated as of February 25, 2000
(the "Effective Date"), is entered into between Metrocall, Inc., a Delaware
corporation (the "Company"), and First Chicago Trust Company of New York, a New
York trust company, as Rights Agent (the "Rights Agent").
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 hereinafter defined) of the Company outstanding on March 6, 2000 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a share of Series E Junior Participating Preferred Stock, par value $.01 per
share, of the Company having the rights and preferences set forth in the
Certificate of Designation, Number, Powers, Preferences and Relative,
Participating, Optional and other Rights of Series E Junior Participating
Preferred Stock filed with the Secretary of State of the State of Delaware on
February 25, 2000, upon the terms and subject to the conditions herein set
forth, and has further authorized the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are defined in Sections 3 and 7).
Accordingly, in consideration of these premises and the mutual
agreements set forth herein, the parties agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated below:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of twenty percent (20%) or more of the Common Shares then outstanding, but shall
not include the following (the "Excluded Persons"):
(i) the Company,
(ii) any wholly owned Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary, or an entity holding Common Shares for or pursuant to the
terms of any such plan,
(iv) HMTF Bridge MC I, LLC, its Affiliates and Associates, so long
as they do not beneficially own more than fifteen percent (15%) of the
Common Shares then outstanding not including in such percentage the
Common Shares issuable under or purchased pursuant to that certain
Option Agreement to be issued by the Company pursuant to the terms of
that certain Common Stock Purchase Agreement dated as of February 2,
2000, between the Company and HMTF Bridge MC I, LLC, and
4
(v) AT&T Wireless Services, Inc., but only by virtue of its
beneficially owning no more than 13,250,000 Common Shares
(appropriately adjusted to reflect any stock split or similar
transaction occurring after the date hereof) pursuant to that certain
Securities Exchange Agreement dated as of February 2, 2000, between the
Company and AT&T Wireless Services, Inc. and provided that any
Affiliate of AT&T Wireless Services, Inc. to whom all or a portion of
such Common Shares has been transferred by AT&T Wireless Services,
Inc. shall not be deemed an Acquiring Person;
provided, however that a Person will not be deemed to have become an Acquiring
Person solely as a result of a reduction in the number of Common Shares
outstanding unless and until such time as (i) such Person or any Affiliate or
Associate of such Person thereafter becomes the Beneficial Owner of additional
Common Shares representing one percent (1%) or more of the then outstanding
Common Shares, other than as a result of a stock dividend, stock split or
similar transaction effected by the Company in which all holders of Common
Shares are treated equally, or (ii) any other Person who is the Beneficial Owner
of Common Shares representing one percent (1%) or more of the then outstanding
Common Shares thereafter becomes an Affiliate or Associate of 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 as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
Acquiring Person as defined pursuant to the foregoing provisions of this Section
1(a), then such Person shall not be deemed to be an Acquiring Person for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the Effective Date; provided,
however that none of HMTF Bridge MC I, LLC, PSINet Inc. and Aether Systems, Inc.
shall be deemed an Affiliate or Associate of one or more of each other solely as
a result of their (and their respective Affiliates' and Associates') ownership
interests in Inciscent, Inc., which is an Affiliate of the Company as of the
Effective Date, and provided further, however, that a Person shall not be deemed
to be an Affiliate or Associate of another Person solely because either or both
Persons are or were directors of the Company.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(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, 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 be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender offer or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
2
5
or Associates until such tendered securities are accepted for purchase;
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 to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except to the extent permitted
by subparagraph (ii)(B) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, (A) 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 and (B) a Person engaged in
business as an underwriter of securities shall not be considered to be the
"Beneficial Owner" of or to "beneficially own" any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of such acquisition.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 p.m. eastern
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.
(f) "Common Shares" when used with reference to the Company shall mean
shares of Common Stock, par value $0.0l 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
Person or, if such Person is a Subsidiary of another Person, the Person or
Persons that ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(i) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) thereof.
3
6
(j) "Preferred Shares" shall mean shares of Series E Junior
Participating Preferred Stock, par value $.01 per share, of the Company.
(k) "Qualified Offer" shall have the meaning set forth in Section
11(a)(ii)(C).
(l) "Redemption Date" shall have the meaning set forth in Section 7.
(m) "Right Certificate" shall have the meaning set forth in Section
3(a).
(n) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(o) "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 interests is owned, directly or indirectly, by such Person.
(p) "Triggering Event" shall mean any action that would cause the
occurrence of any event described in Section 11(a)(ii) or Section 13 hereof.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints First Chicago Trust Company of New York to
be the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable upon ten (10) days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-rights agent.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the twentieth (20th) Business Day after
the Share Acquisition Date and (ii) the twentieth (20th) Business Day (or such
later date as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement of, or first public announcement of the intention of any Person to
commence, a tender offer or exchange offer the consummation of which would
result in beneficial ownership by a Person (other than the Excluded Persons) of
twenty percent (20%) or more of the outstanding Common Shares, in either clause
(i) or clause (ii) other than pursuant to a Qualified Offer (including any such
date that 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"), (x) the Rights will be evidenced (subject to the provisions of Section
3(b)) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send,
4
7
by first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (the "Right Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the Distribution Date (or
the earlier Redemption Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares issued after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between
Metrocall, Inc. and First Chicago Trust Company of New York, dated
as of February 25, 2000 as amended from time to time (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 Metrocall, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Metrocall, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
following receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring Persons (as
defined in the Rights Agreement) and any subsequent holder of such
Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
5
8
SECTION 4. FORM OF RIGHT CERTIFICATES.
The Right Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 22,
the Right Certificates, whenever issued, which are issued in respect of Common
Shares which were issued and outstanding as of the Record Date, shall be dated
as of the Record Date, and all Right Certificates which are issued in respect of
other Common Shares shall be dated as of the respective dates of issuance of
such Common Shares, and in either case on their face shall entitle the holders
thereof to purchase such number of Preferred Shares as shall be set forth
therein at the price per one one-thousandth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such Preferred Shares and the
Purchase Price shall be subject to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either manually
or by facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary, or an Assistant
Secretary, of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this 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 offices, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date and
certificate number of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UPS, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
6
9
Subject to the provisions of Section 14, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date and the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 7(g) or Section 11 (a)(ii) or
that have been exchanged pursuant to Section 27) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Preferred Shares as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment 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 owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS;
NULLIFICATION OF RIGHTS.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date 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
in Jersey City, New Jersey, together with payment of the Purchase Price for each
one one-thousandth of a Preferred Share as to which the Rights are exercised, at
or prior to the earlier of (i) the close of business on the tenth (10th)
anniversary of the Effective Date (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section 23 (the "Redemption
Date").
(b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $50, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 and shall be
payable in lawful money of the United States of America in accordance with
Section 7(c).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the
7
10
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 in cash, or by certified check or bank draft payable to the order of
the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional interests in shares in accordance with Section 14,
(iii) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a), the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 or the transfer of any surrendered Right
Certificates under Section 6, unless and until such registered holder shall have
(i) completed and signed (A) in the case of a Section 7 exercise, a form of
election or (B) in the case of a Section 6 transfer, a form of assignment, as
set forth on the reverse side of the Right Certificate, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
(g) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of an event described in Section 11(a)(ii), any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not
8
11
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 (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(g), shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(g) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. No Right Certificate shall be
issued pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person whose rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person (or any Associate, Affiliate or nominee thereof) whose Rights would be
void pursuant to the preceding sentence shall be canceled.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this 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 canceled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
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.
So long as the Preferred Shares issuable upon the exercise of Rights
may be listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
9
12
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares. The Company
further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax that may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares in a name other
than that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates or depositary
receipts for Preferred Shares upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE.
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Shares transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) 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,
merger or statutory share exchange in which the Company is the continuing or
10
13
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 when the Preferred Shares transfer books of the Company were
open, it 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 Section 11(a)(i) and Section 11(a)(ii),
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).
(i) Subject to Section 27, in the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination
and the Common Shares of the Company shall remain outstanding and
not changed into or exchanged for stock or other securities of any
other Person or the Company or cash or any other property, (2)
shall, in one or more transactions, other than in connection with
the exercise of Rights or the exercise or conversion of securities
exercisable or convertible into capital stock of the Company or any
of its Subsidiaries, transfer any assets to the Company or any of
its Subsidiaries in exchange (in whole or in part) for shares of
any class of capital stock of the Company or any of its
Subsidiaries or for securities exercisable for or convertible into
shares of any class of capital stock of the Company or any of its
Subsidiaries or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares
of any class of capital stock of the Company or any of its
Subsidiaries or securities exercisable for or convertible into
shares of any class of capital stock of the Company or any of its
Subsidiaries (other than as part of a pro rata distribution to all
holders of Common Shares), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise dispose (in one
or more transactions), to, from, with or of, as the case may be,
the Company or any of its Subsidiaries, assets, including
securities, on terms and conditions less favorable to the Company
than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (4) shall receive any
compensation from the Company or any of the Company's Subsidiaries
other than compensation for full-time employment as a regular
employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (5) shall receive the benefit,
directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries,
11
14
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger,
statutory share exchange or consolidation of the Company with any
of its Subsidiaries or any other transaction or series of
transactions involving the Company or any Subsidiary of the Company
(whether or not with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly, of increasing
by more than one percent (1%) the proportionate share of the
outstanding shares of any class of equity securities or of
securities exercisable for or convertible into securities of the
Company or any of its Subsidiaries that is directly or indirectly
owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, or
(C) any Person (other than the Excluded Persons), alone or
together with its Affiliates and Associates, shall, at any time,
become the Beneficial Owner of twenty percent (20%) or more of the
Common Shares then outstanding, unless the event causing the twenty
percent (20%) threshold to be crossed is a transaction set forth in
Section 13, or is an acquisition of Common Shares pursuant to a
tender offer or an exchange offer for all outstanding Common Shares
at a price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers of the
Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person, after receiving advice from one
or more investment banking firms, to be (a) at a price that is fair
to stockholders (taking into account all factors that such members
of the Board deem relevant including, without limitation, prices
that could reasonably be achieved if the Company or its assets were
sold on an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its stockholders
(a "Qualified Offer"),
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of Preferred Shares, such number of Common
Shares as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable and dividing that product by (y) fifty percent
(50%) of the current per share market price of the Common Shares (determined
pursuant to Section 11(d)) on the fifth (5th) day after the date of the
occurrence of any one of the events listed above in this subparagraph (ii);
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13, then only
the provisions of Section 13 shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). At its discretion, the Board of Directors of
the Company may, by resolution duly adopted, provide that holders of Rights,
upon exercise thereof, shall receive, in lieu of Common Shares, such number of
one one-thousandths of a share of Preferred Shares as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Shares for which a Right is then
exercisable and dividing the product by (y) fifty percent (50%) of the then
current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d)) on the fifth (5th) day after the date of the
occurrence of any of the events listed above in this subparagraph (ii).
Notwithstanding the foregoing, upon the
12
15
occurrence of any of the events listed above in this subparagraph (ii), any
Rights that are or were beneficially owned on or after the earlier of the
Distribution Date or the Shares Acquisition Date by an Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall become void in accordance
with the provisions of Section 7(g) of this Agreement and any holder of such
Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement.
(ii) The Company covenants and agrees not to enter into any
transaction of the kind listed in Section 11(a)(ii) if at the time of
such transaction (x) there are any rights (other than the Rights),
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, or (y) it has
insufficient authorized and unissued shares of Common Stock to provide
for the adjustment required by Section 11(a)(ii).
(iii) Any Right Certificate issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof and any Right Certificate issued at any
time upon the transfer of any Rights to an Acquiring Person or any
Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate, and any Right Certificate issued
pursuant to Section 6 or this Section 11 upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in
this sentence, shall contain the following legend:
The Rights represented by this Right Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an 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 void in the circumstances specified
in Section 11(a)(ii) of the Rights Agreement.
(iv) In the event that despite the covenant in subparagraph (iii)
an event specified in subparagraph (ii) occurs and there shall not be
sufficient treasury shares or authorized but unissued Common Shares to
permit the exercise in full of the Rights in accordance with
subparagraph (ii), the Company covenants to use its best efforts to
carry out all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights, and, if such
action is not completed within forty-five (45) days from the date the
adjustment was required, the Company shall: (A) determine the excess of
(1) the value of the Common Shares (the "Exercise Shares") issuable
upon the exercise of a Right (the "Current Value") over (2) the then
current Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Exercise Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of
Common Stock (such shares of preferred stock, "common stock
equivalents")),
13
16
(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, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors
of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
ninety (90) days following the first occurrence of a Section 11(a)(ii)
event, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and
then, if necessary, cash, securities and/or assets which in the
aggregate are equal to the Spread. To the extent that the Company
determines that some action need be taken pursuant to this subparagraph
(v), the Company (x) shall provide, subject to the last sentence of
subparagraph (ii) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights for such time as may be reasonably necessary in order to seek
any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant hereto and to determine the
value thereof.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within forty-five (45) days after
such record date) to subscribe for or purchase Preferred Shares (or shares
having the same rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into Preferred Shares
or equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as defined in Section
11(d)) 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 the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). 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 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.
14
17
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the Preferred Shares (as defined in Section
11(d)) 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 that 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 the Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Common Shares is determined during a
period following the announcement by the issuer of such Common Shares of (1) a
dividend or distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares, or (2) any subdivision,
combination or reclassification of such Common Shares, and prior to the
expiration of thirty (30) Trading Days after the dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current market price shall be
appropriately adjusted to reflect the current market price per Common Share
equivalent. The closing price for each day shall be 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 Common Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Shares selected by the Board of Directors of the Company. The term "Trading Day"
shall mean a day on which NASDAQ is open for the transaction of business or, if
the Common Shares are not listed or admitted to trading on any national
securities exchange, a Monday, Tuesday, Wednesday, Thursday, Friday on which
banking institutions in the State of New York are not authorized or obligated by
law or executive order to close.
(i) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in the
same manner as set forth above
15
18
for Common Shares in clause (i) of this Section 11(d). If the current
per share market price of the Preferred Shares cannot be determined in
the manner provided above, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per
share market price of the Common Shares (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares 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 one percent (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 ten-thousandth of
a Common Share or other share or one-millionth of a Preferred Share as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction that 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), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained
in Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(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 Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-thousandths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
16
19
(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 Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths 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 Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(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, 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.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a share and the number of shares 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-thousandth 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.
17
20
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any of 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 (other than
the Rights), options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such shareholders.
(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 the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares 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.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
In the event, directly or indirectly, (a) the Company shall consolidate
with, or merge with and into, any other Person (other than a consolidation or
merger resulting from a Qualified Offer), (b) any Person shall consolidate with
the Company, or merge with and into the Company (other than a consolidation or
merger resulting from a Qualified Offer) and the Company shall be the continuing
or surviving corporation of such merger and, in connection with such merger, all
or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, (c) the
Company shall engage in any statutory share exchange whereby the Company's
Common Shares are converted into stock, securities,
18
21
cash or any other property of any other Person or (d) 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
fifty percent (50%) or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person other than the Company
or one or more of its wholly owned Subsidiaries, then, and in each such case,
proper provision shall be made so that (i) each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of Common Shares of such other Person (including the Company as successor
thereto or as the surviving corporation) as shall be equal to the result
obtained by (x) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (y) fifty percent (50%) of the current per share market
price of the Common Shares of such other Person (determined pursuant to Section
11(d)) on the date of consummation of such consolidation, merger, statutory
share exchange, sale or transfer; (ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such issuer; (iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9) 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 its Common Shares thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) shall be of no effect following the first occurrence of any event
under clauses (a), (b), (c) or (d) of this Section 13. The Company shall not
consummate any such consolidation, merger, statutory share exchange, 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. The
Company covenants and agrees not to enter into any transaction of the kind
listed in this Section 13 if at the time of such transaction there are any
rights (other than the Rights), warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate 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.
If, for any reason, the Rights cannot be exercised for Common Shares of
the Company or such other Person, then a holder of Rights will have the right to
exchange its Rights, without payment of the applicable exercise price, for cash
from the Company or such other Person in an amount equal to the number of Common
Shares it would otherwise be entitled to purchase times fifty percent (50%) of
the then current market price, as determined pursuant to Section 11(d)(i), of
such Common Shares of the Company or such other Person. If, for any reason,
including, without limitation, if such other Person is an individual, private
partnership or private company, the foregoing cannot be applied to determine the
cash amount into which the Rights are exchangeable, then the Board of Directors
of the Company, based upon the advice from one or more investment banking firms,
shall determine such amount reasonably and with utmost good faith to the holders
of the Rights.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
19
22
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that 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 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 or if the Rights are not listed or admitted to trading on a
market or exchange, 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 that are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to issue certificates which
evidence fractions of Preferred Shares (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-thousandth 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-thousandth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For 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))
for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates that evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1)
20
23
Common Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)) for the Trading Day immediately prior to the date of
such exercise. (d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares (except as provided above) upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of; the obligations of any Person subject to this Agreement.
SECTION 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;
(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; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
21
24
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 24), 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.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of its counsel as set forth in
Section 20.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the corporate trust or stock
transfer business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. 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
22
25
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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 counter-signed, 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
President, any Vice President, the Treasurer or the Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, 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
23
26
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(g) or Section
11(a)(ii)) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13 or 23, 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.
(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 President, any Vice President, the
Treasurer or the Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not 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.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Shares
and Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the
24
27
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 thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the 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 (A) corporation organized and doing business under the
laws of the United States or of the States of Delaware or New York (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the States of Delaware or New York), in
good standing, that is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, or (B) an affiliate of a
corporation described in clause (A) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed, but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and 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 the close of business on (i) the twentieth (20th)
day following the Share Acquisition Date, (or, if the Share Acquisition Date
shall have occurred prior to the Record Date, the close of business on the
twentieth (20th) 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 $.0001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, that if, following
the occurrence of a
25
28
Share Acquisition Date and following the expiration of the right of redemption
hereunder but prior to a Triggering Event, (i) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number of shares of
Common Shares in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did not
result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of ten percent (10%) or less of the outstanding
shares of Common Shares, and (ii) there are not other Persons, immediately
following the occurrence of the event described in clause (i), who are Acquiring
Persons, then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable, and a
Triggering Event shall not be deemed to have occurred, after the first
occurrence of an event described in Section 11(a)(ii) until such time as the
Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within ten (10) days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Shares. Any notice 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, and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
SECTION 24. NOTICE OF CERTAIN EVENTS.
In case the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend) or (b) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation, merger, or statutory share exchange
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 fifty percent (50%) or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other Person, or (e)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25; a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, statutory share exchange, sale, transfer,
26
29
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least twenty (20)
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in accordance
with Section 25; a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11 (a)(ii).
SECTION 25. 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 (a) when delivered personally, (b) if by fax
upon transmission with confirmation of receipt by the receiving party's
facsimile terminal, (c) if sent by documented overnight delivery service on the
date delivered, or (d) if sent by mail, five (5) Business Days after being
mailed by registered or certified mail, addressed as follows (or to such other
address as may be designated by notice to the Rights Agent):
Metrocall, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile no.: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Facsimile no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
First Chicago Trust Company of New York
000 Xxxxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, XX 00000
27
30
Facsimile no.: (000) 000-0000
Attention: Corporate Actions Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date, the Company and the Rights Agent shall,
if the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing shares of
Common Stock, including, without limitation, any supplement or amendment deemed
necessary or appropriate by the Company in light of any judicial or other legal
developments, whether or not controlling precedent in respect of this Agreement.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates (other
than an Acquiring Person or an Affiliate or Associate of any Acquiring Person);
provided, however, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating
to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute such
supplement or amendment and shall be fully protected by Section 18 in so doing.
Nothing herein shall require the Rights Agent to execute any supplement or
amendment that adversely affects the rights and protections afforded to the
Rights Agent under Sections 18, 19 and 20. Prior to the Distribution Date, the
interest of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
SECTION 27. EXCHANGE.
(a) Subject to any limitations of applicable law, 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 7(g) or Section 11(a)(ii)) for Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio
28
31
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Excluded Persons), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
fifty percent (50%) or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 27 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only rights thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(g) or Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b)) for Common Shares exchangeable for Rights, at
the initial rate of one one-thousandth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately adjusted to reflect
adjustments in the voting rights of the Preferred Shares pursuant to the terms
thereof; so that the fraction of a Preferred Share delivered in lieu of each
Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 27, the
Company shall take all such action as may be necessary to authorize additional
Common Shares or Preferred Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holder of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
subsection (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) ) for the Trading Day immediately after the public
announcement by the Company that an exchange is to be effected pursuant to this
Section 27.
29
32
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of
shares of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act
in effect on the date hereof. The Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board or to the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board in good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board to any liability to the holders of the Rights.
SECTION 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Right Certificates.
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 shall be reinstated and shall
not expire until the close of business on the twentieth day following the date
of such determination by the Board of Directors.
30
33
SECTION 32. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
[Signature Pages Follow]
31
34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
METROCALL, INC.
Attest:
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------- -----------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
----------------------------- ---------------------------------
Title: Assistant Secretary Title: Chief Financial Officer
---------------------------- --------------------------------
FIRST CHICAGO TRUST COMPANY OF
NEW YORK
Attest:
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXX X. X'XXXXX
------------------------------- -----------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. X'Xxxxx
----------------------------- ---------------------------------
Title: Customer Service Officer Title: Managing Director
---------------------------- --------------------------------
32
35
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R-____________ ____________ Rights
NOT EXERCISABLE AFTER FEBRUARY 25, 2010 OR AFTER EARLIER
REDEMPTION BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY AT $.0001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS 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 VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT.]*
----------------
* The bracketed portion of the legend shall be inserted only if applicable and
shall replace the preceding sentence.
METROCALL, INC.
RIGHT CERTIFICATE
This certifies that ________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of February 25, 2000 (the "Rights Agreement"),
between Metrocall, Inc., a Delaware corporation (the "Company") and First
Chicago Trust Company of New York, a New York corporation, as Rights Agent (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 p.m.
(New York, New York time) on February 25, 2010 at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series E Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred Shares")
of the Company, at a purchase price of $50 per one one-thousandth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Preferred Shares or fractions thereof that may be
1
36
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-thousandth of a Preferred Share set forth above, are the number and Purchase
Price as of February 25, 2000 based on the Preferred Shares as constituted at
such date and are subject to adjustment upon the happening of certain events as
provided in the Rights Agreement.
Except as otherwise provided in the Rights Agreement, upon the
occurrence of any Triggering Event (as such term is defined in the Rights
Agreement) described in Section 11(a)(ii) of the Rights Agreement, if the Rights
evidenced by this Right Certificate are beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of any such Triggering
Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of Preferred Shares or other securities that 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,
including Triggering Events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of 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 may be redeemed by the Company at its option at a
redemption price of $.0001 per Right at any time prior to the earlier of the
close of business on (i) the twentieth (20th) day following the Share
Acquisition Date (as such time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date (as defined in the Rights
Agreement).
37
At any time after a person becomes an Acquiring Person, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by such Acquiring Person which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share, which may, as 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, as such, shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
Preferred Shares or any other securities of the Company (including Common
Shares) which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of the stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
38
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________, ____
ATTEST METROCALL, INC.
___________________________ By: ______________________________
Name:______________, Assistant Secretary Name:___________________, _________
Countersigned:
By: _______________________________
Authorized Signature
39
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ________________, ____
_____________________________
Signature
Signature Guaranteed:
5
40
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Associate or Affiliate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Associate or Affiliate of an Acquiring Person.
Dated: ________________, ____
_____________________________
Signature
Signature Guaranteed:
41
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
42
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate)
TO: METROCALL, INC.:
The undersigned hereby irrevocably elects to exercise
___________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of the Rights (or Common Shares or
such other securities of the Company or of any other person that may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of and delivered to:
Please insert social security or other identifying number
_________________________________________________
(Please print name and address)
_________________________________________________
If such number of Rights are not all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_________________________________________________
(Please print name and address)
_________________________________________________
Dated: _______________, _______
_______________________________
Signature
Signature Guaranteed:
43
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised, by or on behalf of a Person who is or was an Acquiring
Person or an Associate or Affiliate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Associate or Affiliate of an Acquiring Person.
Dated: ________________, ____
_____________________________
Signature
Signature Guaranteed:
44
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
45
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
SERIES E JUNIOR PARTICIPATING PREFERRED STOCK
On February 18, 2000, the Board of Directors of Metrocall, Inc. (the
"Company") declared a dividend distribution of one preferred share purchase
right ("Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share (the "Common Stock"). The distribution is payable to
stockholders of record at the close of business on March 6, 2000. Each Right,
when exercisable, entitles the registered holder to purchase from the Company
1/1000th of a share of Series E Junior Participating Preferred Stock, par value
$.01 per share (the "Preferred Shares") at a price of $50 per 1/1000th share,
subject to adjustment (the "Purchase Price"). The description of terms of the
Rights are set forth in a Rights Agreement, dated as of February 25, 2000 (the
"Rights Agreement"), between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates representing
shares of Common Stock outstanding as of March 6, 2000, and no separate
certificates evidencing the Rights will be distributed. The Rights will separate
from the Common Stock and a distribution of Right Certificates (as defined
below) will occur upon the earlier of the following dates (the earlier of such
dates, the "Distribution Date"): (1) twenty (20) business days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the "Share Acquisition Date"), or (2) twenty (20) business days (or such later
date as the Board of Directors may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person
(other than the Excluded Persons as defined below) of 20% or more of the
outstanding shares of Common Stock, in either (1) or (2) other than pursuant to
a Qualified Offer (as defined below).
The Rights Agreement contains exceptions from the definition of
Acquiring Person for the following persons (the "Excluded Persons"): (1) the
Company, (2) any wholly owned subsidiary of the Company, (3) any employee
benefit plan of the Company or any subsidiary of the Company or any person
holding shares of Common Stock for or pursuant to the terms of any such employee
benefit plan, (4) AT&T Wireless Services, Inc. with respect to acquisition of
Common Stock and common stock equivalents upon exchange of Series C Convertible
Preferred Stock of the Company, and (5) HMTF Bridge MC I, LLC, its affiliates
and associates, with respect to acquisitions of Common Stock permitted under a
Common Stock Purchase Agreement entered into as of February 2, 2000 between the
Company and HMTF Bridge MC I, LLC.
Until the Distribution Date, (1) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with the Common
Stock certificates, (2) new Common Stock certificates issued after March 6, 2000
will contain a notation incorporating the Rights Agreement by reference, and (3)
the surrender for transfer of any certificates for
46
outstanding shares of Common Stock will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 25, 2010, unless earlier redeemed or
exchanged by the Company as provided in the Rights Agreement.
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 Stock as of the close of business on the
Distribution Date and, thereafter, the separate Right Certificates alone will
represent the Rights.
In the event that a person (other than the Excluded Persons) becomes
the beneficial owner of 20% or more of the then outstanding shares of Common
Stock (except pursuant to an offer for all outstanding shares of Common Stock
and on terms that at least a majority of independent directors determine to be
fair to and otherwise in the best interests of the Company and its stockholders
(a "Qualified Offer")) (a "Flip-in Event"), each holder of a Right will, after
the end of the Redemption Period (defined below), have the right to exercise the
Right by purchasing, for an amount equal to the Purchase Price, shares of Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value (determined pursuant to a formula set forth in the
Rights Agreement) equal to two times such amount. Notwithstanding any of the
foregoing, following the occurrence of a Flip-in Event, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of a Flip-in Event until
such time as the Rights are no longer redeemable by the Company as set forth
below.
For example, if the Purchase Price per Right is $50, each Right not
owned by an Acquiring Person following a Flip-in Event would entitle its holder
to purchase $100 worth of Common Stock (or other consideration, as noted above)
determined pursuant to a formula set forth in the Rights Agreement for $50. If
the Common Stock had a per share value of $10 at such time (as determined
pursuant to such formula), the holder of each Right would be entitled to
purchase 10 shares of Common Stock for $50.
In the event that, at any time following the Share Acquisition Date,
(1) the Company is acquired in a merger or other consolidation transaction in
which the Company is not the surviving corporation (other than a merger or
consolidation transaction that follows a Qualified Offer), (2) the Company
engages in a merger or consolidation transaction (other than a merger or
consolidation transaction that follows a Qualified Offer) in which the Company
is the surviving corporation and the Common Stock of the Company is changed into
or exchanged for other securities or assets, or (3) 50% or more of the Company's
assets or earning power is sold or transferred (other than to the Company or a
wholly owned subsidiary of the Company), each holder of a Right (except Rights
that previously have been voided as set forth above) shall, after the expiration
of the Redemption Period (defined below), have the right to receive, upon
2
47
exercise, common stock of the acquiring company having a value equal to two
times the Purchase Price of the Right.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person, the Board of Directors may exchange the Rights
(other than Rights owned by such person or group, which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, per Right
(subject to adjustment).
The Purchase Price payable, and the number of 1/1000ths of a Preferred
Share or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution to holders of the
Rights (1) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (2) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe for Preferred Shares
or convertible securities at less than the current market price of the Preferred
Shares or (3) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares will be issued (other than fractions that are
integral multiples of 1/1000th of a share of Preferred Shares) and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of exercise.
In general, the Board of Directors of the Company may cause the Company
to redeem the Rights in whole, but not in part, at any time during the period
commencing on March 6, 2000, and ending on the earlier of the close of business
on (1) the 20th day following the Share Acquisition Date or (2) February 25,
2010 (the "Redemption Period") at a price of $.0001 per Right (payable in cash,
Common Stock or other consideration deemed appropriate by the Board of
Directors). After the Redemption Period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company and there are no
other Acquiring Persons. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.0001 redemption price.
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. While the distribution of the Rights should not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock or Preferred Shares (or other consideration) of the
Company or for common stock of the acquiring company as set forth above, or in
the event of a redemption or exchange as provided above.
3
48
Before the Distribution Date, any of the provisions of the Rights
Agreement may be amended by the Board of Directors. From and after the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person or affiliate or associate of an Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment shall be made to lengthen the Redemption Period at
such time as the Rights are not redeemable.
4
