--------------------------------------------------------------------------------
XXXXXXXXX XXXXXX REAL ESTATE INCOME FUND INC.
and
THE BANK OF NEW YORK,
as Rights Agent
FORM OF
RIGHTS AGREEMENT
Dated as of July 16, 2007
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.................................................1
Section 2. Appointment of Rights Agent.........................................3
Section 3. Issue of Right Certificates.........................................4
Section 4. Form of Right Certificates..........................................5
Section 5. Countersignature and Registration...................................5
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.......................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.........................................................6
Section 8. Cancellation and Destruction of Right Certificates.................7
Section 9. Availability of Common Shares......................................8
Section 10. Common Share Record Date...........................................9
Section 11. Adjustment of Purchase Price, Number of Common Shares or
Number of Rights..................................................9
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares...........................................................11
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................11
Section 14. Fractional Rights and Fractional Shares...........................12
Section 15. Rights of Action..................................................13
Section 16. Agreement of Right Holders........................................13
Section 17. Right Certificate Holder Not Deemed a Stockholder.................14
Section 18. Concerning the Rights Agent.......................................14
Section 19. Merger or Consolidation or Change of Name of Rights Agent.........14
Section 20. Duties of Rights Agent............................................15
Section 21. Change of Rights Agent............................................17
Section 22. Issuance of New Right Certificates................................18
Section 23. Redemption........................................................18
Section 24. Exchange..........................................................19
Section 25. Notice of Certain Events..........................................19
Section 26. Notices...........................................................20
Section 27. Supplements and Amendments........................................21
Section 28. Successors........................................................21
Section 29. Benefits of this Agreement........................................21
Section 30. Severability......................................................21
Section 31. Governing Law; Etc................................................22
Section 32. Counterparts......................................................22
Section 33. Descriptive Headings..............................................22
Section 34. Administration....................................................22
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights
FORM OF RIGHTS AGREEMENT
------------------------
Rights Agreement, dated as of July 16, 2007, between XXXXXXXXX XXXXXX
REAL ESTATE INCOME FUND INC., a Maryland corporation (the "COMPANY"), and THE
BANK OF NEW YORK, as Rights Agent (the "RIGHTS AGENT").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one right (a "RIGHT") for each Common Share (as
hereinafter defined) of the Company outstanding at the Close of Business (as
hereinafter defined) on July 18, 2007 (the "RECORD DATE"), each Right
representing the right to purchase six Common Shares, upon the terms and subject
to the conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that is or shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the Common Shares
of the Company then outstanding, but shall not include the Company.
Notwithstanding the foregoing, no Person shall be or become an "Acquiring
Person" as the result of an acquisition of Common Shares of the Company by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the Common Shares of the Company then outstanding; PROVIDED, HOWEVER, that if
a Person shall be or become the Beneficial Owner of 20% or more of the Common
Shares of the Company then outstanding by reason of share purchases by the
Company and shall thereafter become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person". Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares of the Company so
that such Person would no longer be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (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 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), as in effect on the date of this Agreement.
(c) "APPLICABLE PERCENTAGE" shall mean 18% of the outstanding Common
Shares of the Company; provided, however, if a Person or group of Persons has
filed a Schedule 13D or 13G under the Exchange Act, or an amendment thereto, no
later than three days after the Record Date that establishes that such Person or
group beneficially owns more than 18% of the Company's outstanding Common Shares
as of the Record Date, then the Applicable Percentage shall equal the percentage
of such Common Shares of the Company beneficially owned by such Person or group
on the Record Date, rounded up to the next highest one-tenth of 1%.
(d) 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
(other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with whom such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose
of acquiring, holding, voting (except to the extent
contemplated by the proviso to SECTION 1(d)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Owner to
the contrary, the phrase "THEN OUTSTANDING," when used with reference to a
Person's beneficial ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
2
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
Notwithstanding the foregoing, none of the Company's directors or
officers shall be deemed to be the Beneficial Owner of, or to beneficially own,
any Common Shares of the Company owned by any other director or officer of the
Company solely by virtue of such persons acting in their capacities as such,
including, without limitation, in connection with any formulation and
publication of the recommendation of the Board of Directors of the Company of a
position, and any actions taken in furtherance thereof, with respect to any
acquisition proposal relating to the Company, a tender or exchange offer for any
Common Shares of the Company or any solicitation of proxies with respect to any
Common Shares of the Company.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M. New York
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it shall mean 5:00 P.M. New York time, on the next succeeding Business Day.
(g) "COMMON SHARES" when used with reference to the Company shall mean
the shares of common stock, par value $0.0001 per share, of the Company. "COMMON
SHARES" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first mentioned Person.
(h) "DISTRIBUTION DATE" shall have the meaning set forth in SECTION
3(A) hereof.
(i) "FINAL EXPIRATION DATE" shall have the meaning set forth in SECTION
7(A) hereof.
(j) "PERSON" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(k) "PURCHASE PRICE" shall have the meaning set forth in SECTION 7(b)
hereof.
(l) "REDEMPTION DATE" shall have the meaning set forth in SECTION 7(a)
hereof.
(m) "SHARES ACQUISITION DATE" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(n) "SUBSIDIARY" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
3
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.
SECTION 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the tenth day after
the Shares Acquisition Date (such tenth day being herein referred to as the
"DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to the
provisions of SECTION 3(b) hereof) by the Common Shares of the Company
registered in the names of the holders thereof (which Common Shares shall also
be deemed to include Right Certificates) and not by separate Right Certificates
(as hereinafter defined), and (y) the right to receive Right Certificates will
be transferable only with the associated transfer of Common Shares of the
Company. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares of the Company as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of EXHIBIT A hereto (a "RIGHT
CERTIFICATE"), evidencing one Right for each Common Share of the Company so held
(subject to adjustment as provided in this Agreement). As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) If requested, the Company will send a copy of a Summary of Rights,
in substantially the form of EXHIBIT B hereto (the "SUMMARY OF RIGHTS"), by
first-class, postage-prepaid mail, to a record holder of Common Shares of the
Company as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to Common Shares of the
Company outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such Common Shares registered in the names of the
holders thereof together with a copy of the Summary of Rights which shall be
deemed attached thereto. The Company shall take such action as shall be
reasonably necessary to implement the foregoing. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the transfer
of any Common Shares of the Company outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares of the Company
represented thereby.
(c) Common Shares of the Company which become outstanding (including,
without limitation, reacquired Common Shares of the Company referred to in the
penultimate sentence of this paragraph (c)) after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall be deemed to have affixed to them the following legend:
These shares also evidence and entitle the holder hereof
to certain rights as set forth in a Rights Agreement
between Xxxxxxxxx Xxxxxx Real Estate Income Fund Inc.
(the "COMPANY") and The Bank of New York (the "RIGHTS
AGENT") dated as of July 16, 2007 (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 the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and
4
will no longer be evidenced by these shares. The Company
will mail to the holder of these shares a copy of the
Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person (as defined in the
Rights Agreement) may become null and void.
In addition, to the extent reasonably practicable, the Rights Agent
shall add the language above to any DRS Advices issued in connection with the
Common Shares. Until the Distribution Date, the Rights associated with the
Common Shares of the Company shall be evidenced by such Common Shares alone, and
the transfer of any such Common Shares shall also constitute the transfer of the
Rights associated with the Common Shares of the Company represented thereby. In
the event that the Company purchases or acquires any Common Shares of the
Company after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares of the Company shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares of the Company which are no longer
outstanding. The Company shall take such action as shall be reasonably necessary
to implement the foregoing.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Common 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 hereof, the Right Certificates shall entitle the
holders thereof to purchase six Common Shares for each Right at the Purchase
Price, but the number of such Common 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
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
5
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of SECTION 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to SECTION 11(a)(ii) hereof or that have
been exchanged pursuant to SECTION 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common 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 or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the 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 holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) The registered holder of any Right Certificate may, subject to the
second paragraph of SECTION 11(a)(ii), exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent, together with payment of the
Purchase Price for each Common Share as to which the Rights are exercised, at or
prior to the earliest of (i) the Close of Business on the 120th day following
the execution of this Agreement (the "FINAL EXPIRATION DATE"), (ii) the time at
which the Rights are redeemed as provided in SECTION 23 hereof (the "REDEMPTION
6
DATE"), or (iii) the time at which such Rights are exchanged as provided in
SECTION 24 hereof.
(b) The Purchase Price for the six Common Shares purchasable pursuant
to the exercise of a Right shall initially be the par value of such six Common
Shares and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below (the "PURCHASE PRICE").
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with SECTION 9 hereof by wire transfer, certified
check, cashier's check, official bank check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Common Shares the number of Common 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 Common Shares as are to be
purchased (in which case the Common Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with SECTION 14 hereof, (iii)
after receipt of such Common Shares or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of SECTION 14
hereof.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF COMMON SHARES. (a) The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Common Shares, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding Rights in
7
accordance with SECTION 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Common Shares delivered
upon exercise of Rights shall (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 which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of Common Shares or depositary receipts for the Common
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any Common Shares or depositary receipts for Common Shares upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's reasonable satisfaction that no such tax
is due.
(b) So long as the Common Shares and/or other securities issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange or automated quotation system, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all Common Shares issued or reserved for such issuance to be so
listed, upon official notice of issuance, on the principal national securities
exchange, if any, on which the Common Shares are otherwise listed or, if the
principal market for the Common Shares is not on any national securities
exchange, to be eligible for quotation on the Nasdaq National Market or any
successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, if required by
law, as soon as practicable following the earliest date after the first
occurrence of an event in SECTION 11(a)(ii) hereof on which the consideration to
be delivered by the Company upon exercise of the Rights has been determined in
accordance with SECTION 11(a)(iii) hereof, or, if required by law, the
Distribution Date, a registration statement (a "REGISTRATION STATEMENT") under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to
the securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such Registration Statement to become effective as soon as
practicable after such filing, and (iii) cause such Registration Statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Final Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this SECTION 9(c), the
exercisability of the Rights in order to prepare and file such Registration
Statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect, in each case with prompt written
notice to the Rights Agent. In addition, if the Company shall determine that a
Registration Statement is required following the Distribution Date, the Company
8
may temporarily suspend the exercisability of the Rights until such time as a
Registration Statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, the exercise thereof is not permitted under applicable law or, if
required by law, a Registration Statement has not been declared effective.
SECTION 10. COMMON SHARE RECORD DATE. Each Person in whose name any
Common Shares are issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Common Shares represented
thereby on 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 Common Shares transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on the next succeeding Business Day on which the Common 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 Common 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 COMMON SHARES OR
NUMBER OF RIGHTS. The number of Common Shares or other securities 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 Common Shares
payable in Common Shares, (B) subdivide the outstanding Common
Shares, (C) combine the outstanding Common Shares into a
smaller number of Common Shares or (D) issue any shares of its
capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in
this SECTION 11(a), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such
date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately
prior to such date and at a time when the Common Shares
transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right.
9
(ii) Subject to SECTION 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each holder of a Right
shall thereafter have a right to receive, upon exercise
thereof at the Purchase Price, six Common Shares of the
Company on the date of the occurrence of such event; PROVIDED,
HOWEVER, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the
provisions of SECTION 13 hereof, then only the provisions of
SECTION 13 hereof shall apply and no adjustment shall be made
pursuant to this SECTION 11(a)(ii). In the event that any
Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be
afforded by the Rights.
Notwithstanding anything else in the Agreement, from and after
the occurrence of such event, any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) in excess of
the Rights associated with the Applicable Percentage of the
Common Shares outstanding on or prior to the Distribution Date
or in excess of the Applicable Percentage of the Rights
outstanding after the Distribution Date shall be void and any
holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. No
Right Certificate shall be issued pursuant to SECTION 3 that
represents Rights beneficially owned by an Acquiring Person
whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any Rights to
an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate;
and any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient Common Shares
of the Company issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
additional Common Shares of the Company for issuance upon
exercise of the Rights.
(b) Irrespective of any adjustment or change in the Purchase Price
or the number of Common Shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
(c) In any case in which this SECTION 11 shall require that an
adjustment 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
10
holder of any Right exercised after such record date of the Common Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Common 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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares of the
Company a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with SECTION 25 hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares of the Company shall be changed into or
exchanged for stock or other securities of any other Person (or the Company) or
cash or any other property, or (c) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (other than Rights which have become void
pursuant to SECTION 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price per Right, in accordance with the terms of this Agreement, six Common
Shares of such other Person (including the Company as successor thereto or as
the surviving corporation); (ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "COMPANY" shall thereafter be deemed to refer
to such issuer; and (iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares to
permit the exercise in full of all outstanding Rights in accordance with this
Agreement) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable upon
the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company shall not enter into any transaction of the
kind referred to in this SECTION 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this SECTION 13 shall similarly apply to successive
11
mergers or consolidations or sales or other transfers.
(b) The Company shall not consummate any such consolidation, merger,
sale or transfer unless such Person described above in SECTION 13(a) shall have
sufficient authorized and unissued shares of common stock not reserved for other
purposes to permit the full exercise of the Rights in accordance with this
SECTION 13, and unless prior thereto the Company and each such Person shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraph (a) of this SECTION 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets mentioned in paragraph (a) of this SECTION
13, such Person, at its own expense, will, to the extent necessary or
appropriate:
(i) prepare and file a Registration Statement under the Securities
Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will
use its best efforts to cause such Registration Statement to
(A) become effective as soon as practicable after such filing
and (B) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the
eligibility requirements for quotation on the Nasdaq National
Market; and
(iv) deliver to holders of the Rights historical financial
statements for such Person and each of its Affiliates which
comply in all respects with the requirements for registration
on Form 10 under the Exchange Act.
The provisions of this SECTION 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that an
event described in this SECTION 13 shall occur at any time after the occurrence
of an event described in SECTION 11(a)(ii) hereof, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in SECTION 13(a) hereof.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right.
(b) The Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights. In lieu of fractional Common Shares, 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 Common Share.
12
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
SECTION 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares of the Company); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares of the
Company), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Shares of
the Company), may, on such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights 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 with the associated Common Shares of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; 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) 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 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. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or other distributions or be deemed for any purpose the holder of the
Common 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
13
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in SECTION 25 hereof), or to
receive dividends or other distributions 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 such compensation as has been agreed to in writing by the
Company and the Rights Agent for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred by the Rights Agent 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, obligation, damage or expense
(including reasonable attorneys' fees and other professional services)
(collectively, "LOSSES"), other than for Losses for which the Rights Agent would
be liable pursuant to SECTION 20(c) hereof, in connection with the acceptance
and administration of this Agreement, including, without limitation, the costs
and expenses of defending against any claim of liability by the Company under
this Agreement.
Without limiting the generality of the foregoing, and in addition
thereto, the Company agrees that the Rights Agent shall be protected and shall
incur no liability and shall be indemnified for and held harmless by the Company
against any and all Losses for, or in respect of, any action taken, suffered or
omitted by it in connection with, its administration of this Agreement (i) in
reliance upon any Right Certificate 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 (ii)
otherwise upon the advice of counsel as set forth in SECTION 20 hereof. Anything
in this Agreement to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation or other Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation or other Person resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any
corporation or other Person succeeding to the stock transfer or corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
PROVIDED, that such corporation or other Person would be eligible for
appointment as a successor Rights Agent under the provisions of SECTION 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
14
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with or in reliance on 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, suffering or omitting 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 in form reasonably satisfactory to the Rights Agent
signed by any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for, and the Rights Agent shall not be liable for, any
action taken, suffered or omitted to be taken in good faith by it under the
provisions of this Agreement in reliance upon such certificate. The Company
shall cause its Secretary to deliver a certificate to the Rights Agent including
the names and specimen signatures of such officers.
(c) The Rights Agent shall not be liable to the Company or any other
Person except for direct money damages arising out of the Rights Agent's own
negligence, bad faith or willful misconduct, and in no event shall the Rights
Agent be liable to the Company or any other Person for any special, indirect or
consequential loss or damage of any kind whatsoever, even if the same were
foreseeable and regardless of the form of action.
(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
15
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to SECTION 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in this Agreement, 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 be responsible for any
determination of the market value of the Rights or any Common Shares of the
Company pursuant to the provisions hereof; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Common 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 Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken, or suffered or omitted by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
16
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) The Rights Agent shall not be liable for any Losses arising from
matters of FORCE MAJEUR beyond the reasonable control of the Rights Agent,
including, without limitation, strikes, work stoppages, acts of war, terrorism,
insurrection, revolution, nuclear or natural catastrophes or acts of God, the
insolvency of any depository, or any interruptions, loss or malfunctions of
utilities, communications or computer (hardware or software) services.
(l) The Rights Agent shall have no other obligations or duties to the
Company or any other Person except as expressly set forth in this Agreement.
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 of the Company 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 of
the Company by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 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 such holder's 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 (i) a corporation organized and
doing business under the laws of the United States or of any state of the United
States so long as such corporation is authorized to do business as a banking
institution under such laws, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authorities and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (ii) an affiliate of an institution that satisfies the
requirements set forth in clause (i) 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 of the Company, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to appoint a successor Rights Agent or to give any notice provided for in this
17
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 such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "REDEMPTION PRICE").
The redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
SECTION 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; PROVIDED, HOWEVER, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this SECTION 23 or in
SECTION 24 hereof, and other than in connection with the purchase of Common
Shares of the Company prior to the Distribution Date.
SECTION 24. EXCHANGE. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of SECTION
11(a)(ii) hereof) for Common Shares of the Company at an exchange ratio of six
Common Shares per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "EXCHANGE RATIO").
18
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
SECTION 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares of the Company
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares of the Company for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of SECTION 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares of
the Company issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this SECTION 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares of the Company for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common
Shares of the Company. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Common Shares of the Company would otherwise be issuable
an amount in cash equal to the same fraction of the current market value of a
whole Common Share of the Company.
SECTION 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose (i) to pay any dividend or other distribution payable in stock of any
class to the holders of its Common Shares or to make any other distribution to
the holders of its Common Shares (other than a regular monthly cash dividend or
distribution), (ii) to offer to the holders of its Common Shares rights or
warrants to subscribe for or to purchase any additional Common Shares or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares (other than a reclassification
involving only the subdivision of outstanding Common Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to effect a subdivision, combination or consolidation of the Common
Shares of the Company (by reclassification or otherwise than by payment of
dividends or other distributions in Common Shares of the Company), then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with SECTION 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
19
is to take place and the date of participation therein by the holders of the
Common Shares of the Company, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least ten (10) days prior to the record date for determining holders of the
Common Shares for purposes of such action, and in the case of any such other
action, at least ten (10) days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Shares
of the Company, whichever shall be the earlier.
(b) In case the event set forth in SECTION 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with SECTION 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under SECTION 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Xxxxx Xxxxxxx
Chairman of the Board
Xxxxxxxxx Xxxxxx Real Estate Income Fund Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Subject to the provisions of SECTION 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Stock Transfer Administration - Xxxxxxxxx Xxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time 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 to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
or to make any other provisions with respect to the Rights which the Company may
20
deem necessary or desirable, any such supplement or amendment to be evidenced by
a writing signed by the Company and the Rights Agent; PROVIDED, HOWEVER, that
from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect the
interests, as determined in the sole discretion of the Board of Directors, of
the holders of Rights as a group (other than any Acquiring Person and its
Affiliates and Associates). Without limiting the foregoing, the Company may at
any time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to (a) reduce the Redemption Price or (b) increase the Purchase Price.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares
of the Company).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
SECTION 31. GOVERNING LAW; ETC. This Agreement shall be interpreted and
construed in accordance with the internal substantive laws (and not the choice
of law rules) of the State of New York. All actions and proceedings brought by
the Rights Agent relating to or arising from, directly or indirectly, this
Agreement may be litigated in courts located within the State of New York. The
Company hereby submits to the personal jurisdiction of such courts; hereby
waives personal service of process upon it and consents that any such service of
process may be made by certified or registered mail, return receipt requested,
directed to Company at its address last specified for notices hereunder, and
service so made shall be deemed completed five (5) days after the same shall
have been so mailed; and hereby waives the right to a trial by jury in any
action or proceeding with the Rights Agent. All actions and proceedings brought
by Company against the Rights Agent relating to or arising from, directly or
indirectly, this Agreement shall be litigated only in courts located within the
State of New York. In this regard, the parties agree that the courts of the
State of New York are the most convenient forum to resolve such actions and,
accordingly, will not argue to the contrary in such actions or proceedings.
21
SECTION 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 34. ADMINISTRATION. The Board of Directors of the Company shall
have the exclusive power and authority to administer and interpret the
provisions of this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company or as may be
necessary or advisable in the administration of this Agreement. All such
actions, calculations, determinations and interpretations which are done or made
by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and shall not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: XXXXXXXXX XXXXXX REAL ESTATE
INCOME FUND INC.
By: __________________ By:_________________________________
Name: Name:
Title:
Attest: THE BANK OF NEW YORK
By: ___________________ By:_________________________________
Name: Name:
Title:
EXHIBIT A
---------
FORM OF RIGHT CERTIFICATE
Certificate No. R-___________ ____________ Rights
NOT EXERCISABLE AFTER 120 DAYS AFTER EXECUTION OF THE RIGHTS
AGREEMENT OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
CERTAIN RIGHTS OWNED BY ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) SHALL
BECOME NULL AND VOID.
Right Certificate
XXXXXXXXX XXXXXX REAL ESTATE INCOME FUND INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of July 16, 2007 (the "RIGHTS AGREEMENT"), between Xxxxxxxxx
Xxxxxx Real Estate Income Fund Inc., a Maryland corporation (the "Company"), and
The Bank of New York, as Rights Agent (the "RIGHTS AGENT"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., Eastern time, on November 13, 2007 at
the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, six fully paid non-assessable shares of Common Stock, par value
$.0001 per share (the "COMMON SHARES"), of the Company, at a purchase price
equal to the aggregate par value of such Common Shares (the "PURCHASE PRICE"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of Common Shares which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are as
of July 18, 2007. As provided in the Rights Agreement, the Purchase Price and
the number of Common Shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for Common Shares.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or other distributions or be deemed for any purpose the holder
of the Common Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _________________, ____.
ATTEST: XXXXXXXXX XXXXXX REAL ESTATE
INCOME FUND INC.
By: __________________________ By: _______________________________
Name: Name:
Title:
Countersigned:
The Bank of New York
By: ______________________________
Authorized Signature
A-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _________________, ____
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
A-4
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: XXXXXXXXX XXXXXX REAL ESTATE INCOME FUND INC.
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that such Common Shares
be issued in the name of:
Please insert social security or other identifying number:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _________________, ____
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible institution (a bank,
stockbroker, savings and loan association or credit union with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
A-5
Form of Reverse Side of Right Certificate - continued
- - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-6
EXHIBIT B
---------
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, CERTAIN RIGHTS OWNED BY ANY PERSON WHO
IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN
THE RIGHTS AGREEMENT) SHALL BECOME NULL AND VOID
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On July 16, 2007, the Board of Directors of Xxxxxxxxx Xxxxxx Real
Estate Income Fund Inc. (the "COMPANY") adopted a resolution declaring a
dividend of one right (a "RIGHT") for each outstanding share of common stock,
par value $.0001 per share (the "COMMON SHARES"), of the Company. The dividend
is payable on July 18, 2007 (the "RECORD DATE") to the stockholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company six Common Shares at a price equal to the aggregate par value of such
Common Shares (the "PURCHASE PRICE"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as of July 16,
2007 (the "RIGHTS AGREEMENT") between the Company and The Bank of New York, as
Rights Agent (the "RIGHTS AGENT").
Until 10 days following a public announcement that a person or group of
affiliated or associated persons have acquired beneficial ownership of 20% or
more of the outstanding Common Shares of the Company (an "ACQUIRING PERSON")
(such date being called the "DISTRIBUTION DATE"), the Rights will be evidenced,
with respect to any of the Common Shares outstanding as of the Record Date, by
such Common Share with a copy of this Summary of Rights deemed attached thereto.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Shares issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the transfer of any
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with such Common Shares. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("RIGHT CERTIFICATES") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on November 13, 2007 (the "FINAL EXPIRATION DATE"), unless the
Rights are earlier redeemed or exchanged by the Company, in each case, as
described below.
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
Common Shares purchasable upon exercise of the Rights will not be
redeemable.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person in excess of the Rights associated
with the Applicable Percentage of the Common Shares outstanding on or prior to
the Distribution Date or in excess of the Applicable Percentage of the Rights
outstanding after the Distribution Date (which will thereafter be void), will
thereafter have the right to receive (subject to adjustment) upon exercise six
Common Shares. "Applicable Percentage" shall mean 18% of the outstanding Common
Shares of the Company; provided, however, if a Person or group of Persons has
filed a Schedule 13D or 13G under the Exchange Act, or an amendment thereto, no
later than three days after the Record Date that establishes that such Person or
group beneficially owns more than 18% of the Company's outstanding Common Shares
as of the Record Date, then the Applicable Percentage shall equal the percentage
of such Common Shares of the Company beneficially owned by such Person or group
on the Record Date, rounded up to the next highest one-tenth of 1%. At any time
after any person or group becomes an Acquiring Person, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by such person or
group which will have become void), in whole or in part, at an exchange ratio of
six Common Share per Right (subject to adjustment).
The Rights Agreement provides that none of the Company's directors or
officers shall be deemed to beneficially own any Common Shares owned by any
other director or officer by virtue of such persons acting in their capacities
as such, including in connection with the formulation and publication of the
Board of Directors' recommendation of its position, and actions taken in
furtherance thereof, with respect to an acquisition proposal relating to the
Company or a tender or exchange offer for the Common Shares.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, six shares of common stock of the acquiring company.
The Company shall not be required to issue fractions of Common Shares
upon exercise of the Rights.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "REDEMPTION PRICE").
The redemption of the Rights may be made effective at such time on such basis
B-2
with such conditions as the Board of Directors in its sole discretion may
establish.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to (a) reduce the Redemption Price or (b) increase the Purchase Price, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person, no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring Person and its
affiliates and associates).
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 or other distributions.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission by the Company as an Exhibit to its Registration Statement
on Form 8-A dated as of July 16, 2007. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
B-3
