COMPUTER HORIZONS CORP.
and
REGISTRAR AND TRANSFER COMPANY
as Rights Agent
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Rights Agreement
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Dated as of July 13, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 13, 1999 (the "Agreement"), between
Computer Horizons Corp., a New York corporation (the "Company"), and Registrar
and Transfer Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend distribution of one right (a "Right") for each share of the common
stock, par value $.10, of the Company outstanding as of the close of business on
July 16, 1999 (the "Record Date"), and authorized and directed the issuance of
one Right in respect of each such share of common stock of the Company that
shall become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued in accordance with the
provisions of Section 22 hereof with respect to shares of such common stock that
become outstanding after the Distribution Date and prior to the Termination
Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the then outstanding shares of Common Stock (other than as a
result of a Permitted Offer, as defined below) or was such a Beneficial Owner at
any time after the Close of Business on the date hereof, whether or not such
Person continues to be the Beneficial Owner of 20% or more of the then
outstanding shares of Common Stock. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company (a "Benefit Plan"), or (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
Benefit Plan, and (B) no Person shall become an "Acquiring Person":
(i) as a result of the acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock
outstanding, increases the proportional number of shares beneficially
owned by such Person together with all Affiliates and Associates of
such Person; provided, however, that if (A) a Person (including,
without limitation, any Grandfathered Stockholder) would be or become
an Acquiring Person (but for the operation of this subparagraph (i)) as
a result of the acquisition of shares of Common Stock by the Company,
and (B) after such share acquisition by the Company, such Person, or an
Affiliate or Associate of such Person,
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becomes the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be deemed an Acquiring Person; or
(ii) if the Board of Directors determines in good faith that a Person
who would otherwise be an "Acquiring Person" has become such
inadvertently, and such Person (A) does not attempt to exercise any
control over the business affairs or management of the Company,
including by means of a proxy solicitation, and (B) divests as promptly
as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person", then such Person
shall not be deemed 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 Exchange Act, as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both) pursuant to
any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a
tender offer or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates 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 (whether
or not in writing); 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 (x)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act and (y) 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 (or any Affiliate or Associate thereof) with which the
Person whose beneficial ownership is being determined (or any of such
Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), other than customary
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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 pursuant to a revocable proxy as
described in the proviso to clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any voting securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(d) "Board of Directors" shall mean the Board of Directors of the
Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
Federal holiday or a day on which banking institutions in New York City 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 City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Stock," when used with respect to the Company, shall
mean the common stock, $.10 par value, of the Company or, in the event of a
subdivision, combination, or consolidation with respect to such shares of Common
Stock, the shares of Common Stock resulting from such subdivision, combination
or consolidation. "Common Stock," when used with reference to any Person other
than the Company, shall mean the capital stock (or equity interests) with the
greatest voting power of such other Person, or if such other Person is a
Subsidiary of another Person, the Person or Persons that ultimately control such
first-mentioned Person.
(h) The "current market price" shall have the meaning set forth in
Section 11(d) hereof.
(i) "Distribution Date" shall have the meaning set forth in Section
3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(k) "Expiration Date" shall mean the earlier of the Final Expiration
Date or the date on which the Rights are redeemed as provided in Section 23
hereof.
(l) "Final Expiration Date" shall mean July 15, 2009.
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(m) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding shares of Common Stock at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by
resolution adopted by the Board of Directors to be adequate (taking into account
all factors that such directors deem relevant) and otherwise in the best
interests of the Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is being made) taking
into account all factors that such directors may deem relevant.
(n) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, association, joint venture, group
(as such term is used in Rule 13d-5 under the Exchange Act) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(o) "Preferred Stock" shall mean shares of the Series B Junior
Participating Preferred Stock, $.10 par value per share, of the Company, having
the rights, preferences and limitations set forth in the form of Certificate of
Amendment of the Company's Certificate of Incorporation attached to this
Agreement as Exhibit A.
(p) "Principal Party" shall have the meaning set forth in Section
12(c) hereof.
(q) "Right Certificates" shall have the meaning set forth in Section
3(a) hereof.
(r) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(s) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(t) "Section 12(a) Event" shall mean any event described in clauses
(x), (y) or (z) of Section 12(a) hereof.
(u) "Securities Act" means the Securities Act of 1933, as amended
and as in effect on the date of this Agreement.
(v) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such; provided, however,
that if such Person is determined not to have become an Acquiring Person
pursuant to Section 1(a)(ii) hereof, then no Stock Acquisition Date shall be
deemed to have occurred.
(w) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
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(x) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(y) "Transfer" shall mean any sale, assignment, transfer or other
disposition.
(z) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 12 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Stock Acquisition Date, (ii) the
Close of Business on the tenth Business Day, or such later date as may be
determined by resolution of the Board of Directors , after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, or any entity holding Common Stock for or pursuant to the terms of any
Benefit Plan) of a tender or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (including, in the case of
both (i) and (ii), any such date which is after the date of this Agreement and
prior to the issuance of the Rights), the earlier of (i) and (ii) 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 certificates for
shares of Common Stock registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates (as defined below))
and not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only simultaneously with and together with the
transfer of the underlying shares of Common Stock; provided, however, that if a
tender or exchange offer is terminated prior to the occurrence of a Distribution
Date, then no Distribution Date shall occur as a result of such tender or
exchange offer. Until the Distribution Date, the surrender for transfer of any
certificate for shares of Common Stock outstanding on the Record Date shall also
constitute the transfer of the Rights associated with such shares of Common
Stock. As soon as is 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, postage prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more right certificates,
in substantially the form attached hereto as Exhibit B (the "Right
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock in
the form of Exhibit C hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of
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Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for shares of Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates
together with a copy of the Summary of Rights attached thereto.
(c) Certificates for shares of Common Stock which become outstanding
(including, without limitation, reacquired shares of Common Stock referred to in
the last sentence of this Section 3(c)) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date shall be deemed also to
be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Computer Horizons Corp. and
Registrar and Transfer Company, dated as of July 13,
1999 (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
Computer Horizons Corp. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no
longer be evidenced by this certificate. Computer
Horizons Corp. will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as defined in the
Rights Agreement) and certain related Persons, whether
currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with the shares of
Common Stock represented by such certificates shall be evidenced by such
certificates alone and registered owners of shares of Common Stock shall also be
the registered holders of the associated Rights; and the surrender for transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby. In the event
that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
shares of Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the shares of
Common Stock which are no longer outstanding.
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Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth as Exhibit B to this Agreement and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation 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 11 and
Section 22 hereof, the Right Certificates, whenever distributed, shall be dated
as of the Record Date and shall entitle the holders thereof to purchase such
number of one-thousandths of a share of Preferred Stock as shall be set forth
therein at the price per one one-thousandth of a share of Preferred Stock set
forth therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights which are null and void pursuant to Section
7(e) of this Agreement and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate
are or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby
are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Right
Certificate.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its President or any Vice
President, either manually or by facsimile signature, and 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 so countersigned.
In case any officer of the Company whose manual or facsimile signature is
affixed to the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates may nevertheless be countersigned by the Rights
Agent, issued and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company. Any Right
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Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office or offices designated as the appropriate place for
surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the right
Certificates, the number of Rights evidenced on the face of each of the Right
Certificates, the date of each of the Right Certificates and the Right
Certificate number.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 4(b), Section 7(e) and 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 Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred Stock (or
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificates until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
Upon (i) receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them (a) of the loss, theft, destruction or
mutilation of a Right Certificate, and, (b) in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, (ii) at
the request of the Company, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and (iii) in case of mutilation of a
Right Certificate, surrender to the Rights Agent and cancellation of such Right
Certificate, the Company will issue
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and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price for the total number of
one one-thousandth of a share of Preferred Stock (or other securities, as the
case may be) as to which the surrendered Rights are exercised, at or prior to
the Close of Business on the Expiration Date.
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $90,
shall be subject to adjustment from time to time as provided in Section 11 and
Section 12 hereof and shall be payable in accordance with paragraph (c) of this
Section 7, except to the extent otherwise provided in Section 12(f).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) to be purchased as set forth below and
an amount equal to any applicable tax or charge required to be paid by the
holder of such Right Certificate in accordance with Section 6 of this Agreement,
by certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i)(A) requisition from any
transfer agent of the Preferred Stock (or make available, if the Rights Agent is
the transfer agent) certificates for the number of shares of Preferred Stock to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or, (B) if the Company in its sole discretion
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights into a depository, requisition from the depositary agent
depositary receipts representing such number of one one- thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock 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) requisition from the Company,
when appropriate, 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 requisitioned certificates or depository receipts, promptly 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 of such cash, promptly deliver
that cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other
9
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person, or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof, or the
Rights Agent shall place an appropriate notation on the Right Certificate with
respect to those Rights exercised.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for
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such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise (other than an
exercise pursuant to Section 11(a)(ii)), transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock the number of shares of Preferred Stock that, prior to the
occurrence of a Triggering Event, will be sufficient to permit the exercise in
full of all outstanding Rights. The Company covenants and agrees that at all
times after the occurrence of a Triggering Event it will, to the extent
reasonably practicable, cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock (and/or other securities), or any
authorized and issued shares of Common Stock (and/or other securities) held in
its treasury, the number of shares of Common Stock (and/or other securities, as
the case may be) that will be sufficient to permit the exercise in full of all
outstanding Rights pursuant to this Agreement.
(b) So long as the Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock or other securities) issuable upon the exercise
of Rights may be listed on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
is practicable following the Shares Acquisition Date (or, if required by law,
such earlier date following the Distribution Date as is so required), a
registration statement under 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 and the
rules and regulations thereunder) until the date of the expiration of the rights
provided by Section 11(a)(ii). The Company will also take
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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.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all one one-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable securities.
(e) 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 one one-thousandths of a share of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any tax or charge which may
be payable in respect to any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for a number of one one- thousandths of a share of Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, or to issue or deliver any certificates for a
number of one one-thousandths of a share of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) upon the exercise of any
Rights until any such tax has been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock (or Common Stock or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable taxes
or charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock and/or
other securities, as the case may be) 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 stockholder of the Company
with respect to 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.
12
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number and kind of shares, or fractions
thereof, 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 that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (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 under this Section 11(a) and Section 7(e) hereof, 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 Preferred Stock or capital stock, as the case may
be, 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 Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock 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 classification.
If an event occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right, except as provided below
and in Section 7(e) hereof, shall thereafter have the right to receive, upon
exercise thereof at the then-current Purchase Price in accordance with the terms
of this Agreement, in lieu of the number of one one-thousandths of a share of
Preferred Stock for which such Right was otherwise then exercisable, such number
of shares of Common Stock of the Company as shall equal the result obtained by
(x) multiplying the then-current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of such Section 11(a)(ii) Event, and
(y) dividing that product by 50% of the current market price per share of the
Common Stock of the Company (determined pursuant to Section 11(d) hereof) on the
date of such first occurrence (such number of shares being hereinafter referred
to as the "Adjustment Shares") provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 12 hereof, then only the provisions of Section 12 hereof
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
The Company shall notify the Rights Agent as to any Persons who are deemed by
the Company to be Acquiring Persons or any Associates or Affiliates of the
Acquiring Persons and shall identify any Rights pertaining thereto. The Rights
Agent shall have no responsibility to itself
13
identify an Acquiring Person or any Associate or Affiliate of the Acquiring
Person, but shall rely solely on the Company's identification.
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Restated Certificate of Incorporation, as
amended, but not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights are not sufficient to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a)), the Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price attributable to a Right (such excess, the "Spread")
and (B) with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares, or units of shares, of Preferred
Stock which the Board of Directors has determined to have the same value as
shares of Common Stock (such shares of Preferred Stock, "common stock
equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing having an aggregate value equal to the Current
Value, where such aggregate value has been determined by action of the Board of
Directors; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the first occurrence of a Section 11(a)(ii) Event, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right
Certificate and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and, if necessary, cash, securities
and/or assets that in the aggregate are equal to the Spread. If the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than one hundred twenty (120)
days after the first occurrence of a Section 11(a)(ii) Event, in order that the
Company may seek stockholder approval for the authorization of such additional
shares (such period as it may be extended, the "Substitution Period"). To the
extent that the Company determines as provided above that some action is to be
taken pursuant to the terms of this Section 11(a)(iii) contained above, the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
this Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall deliver notice to the Rights Agent and issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as deliver notice to the Rights Agent and issue a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
current per share market price of Common Stock (as determined pursuant to
Section 11(d) hereof) on the date of the first occurrence of the event described
in Section 11(a)(ii) hereof, and the value of any "common stock equivalents"
shall be deemed to have the same value as the Common Stock on such date.
14
(b) In the event the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them for a period expiring within 45 calendar days after such record
date to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges or preferences as the shares of Preferred Stock ("equivalent
preferred stock") or securities convertible into Preferred Stock or equivalent
preferred stock) at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion or exercise price per share,
if a security convertible into or exercisable for Preferred Stock or equivalent
preferred stock) less than the "current market price" per share of Preferred
Stock (as defined in Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of Rights be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of such Rights. In case such
subscription price may be paid in a consideration, part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and if such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In the event the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash or other assets (other than a regular quarterly cash dividend
or a dividend payable in Preferred Stock, but including any dividend payable on
stock other than Preferred Stock) or convertible securities, subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price per share of
the Preferred Stock (as defined in Section 11(d) hereof) on such record date
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding upon the Rights Agent, of the portion of such
evidences of indebtedness, cash or other assets or convertible securities,
subscription
15
rights or warrants applicable to one share of Preferred Stock and the
denominator of which shall be such current market price) per share of Preferred
Stock provided, however, that in no event shall the consideration to be paid
upon the exercise of Rights be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of such Rights. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that if the current market price per share of
Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (x) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock or (y) any subdivision, combination or
reclassification of such Common Stock and prior to the expiration of thirty (30)
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the current market price per share of Common Stock shall be
appropriately adjusted to reflect the current market price per share equivalent
of Common Stock. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the NASDAQ
Stock Market ("NASDAQ") or such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date, as determined in good faith
by the Board of Directors, shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. If on any such date the
Common Stock is not publicly held or not so listed or traded, "current
16
market price" per share shall mean the fair value per share as determined in
good faith by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth for the Common Stock in Section 11(d)(i) hereof (other than
the last sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in Section
11(d)(i) hereof, the "current market price" per share of Preferred Stock shall
be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, "current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding (except the last
sentence of this Section 11(e)), no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a share of Common Stock or other security or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 12(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right and the number of Rights
outstanding shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11(a), (b) and (c) and the provisions of
Sections 7, 9, 10, 12 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
17
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-thousandths of a share covered by a
Right immediately prior to such adjustment to the Purchase Price by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one- thousandths of
a share of Preferred Stock for which such Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter but, if the Right
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Preferred Stock, or fraction thereof, issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a share which were expressed in the initial Right
Certificates issued hereunder.
18
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the one one-thousandths
of a share of Preferred Stock, Common Stock or other securities issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of one one-
thousandths of a share of Preferred Stock, Common Stock or other securities at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock, or fraction thereof, and any other capital stock
or securities of the Company, if any, issuable upon such exercise, over and
above the shares of Preferred Stock, or fraction thereof, 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 (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board of Directors shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to the
holders of its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not at any time
after the Distribution Date (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole), to any
other Person or Persons (other than the Company and/or any of its Subsidiaries)
in one or more transactions each of which complies with Section 11(o) hereof),
if at the time of or immediately after such consolidation, merger or sale there
are any charter or by-law provisions, securities outstanding (including but not
limited to rights, warrants or other instruments), agreements in effect or other
actions taken which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or prior to, simultaneously with
or immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would
19
constitute, the "Principal Party" for purposes of Section 12(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Corporation and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) In the event that any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in shares of Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case (x) the number of one one-thousandths of a Preferred Share purchasable
after such event upon exercise of each Right shall be determined by multiplying
the number of one one- thousandths of a Preferred Share so purchasable
immediately before such event by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (y) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
(q) The exercise of Rights under Section 11(a)(ii) shall only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised and
shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including the rights represented by Section 12.
Section 12. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, on or following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) 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 consolidation or
merger, other than, in the case of any transaction described in (x) or (y), a
merger or consolidation which results in all of the securities generally
entitled to vote in the election of directors ("voting securities") of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the
20
continuing or surviving entity) all of the voting securities of the Company or
such continuing or surviving entity outstanding immediately after such merger or
consolidation and the holders of such securities not having changed as a result
of such merger or consolidation), or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or series of related 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 or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then-current Purchase Price in accordance with the terms
of this Agreement, such number of shares of validly authorized and issued, fully
paid and non-assessable Common Stock of the Principal Party (as defined below),
not subject to any liens, encumbrances, rights of call or first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then-current Purchase Price by the then number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of such Section 12(a) Event (or, if a Section 11(a)(ii) Event
had occurred prior to such Section 12(a) Event, multiplying the number of such
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of such Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product by (2) 50% of the current market price
per share of the Common Stock of such Principal Party (determined in the manner
described in Section 11(d) on the date of consummation of such Section 12(a)
Event); (ii) the Principal Party 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 Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply to
such Principal Party following the first occurrence of a Section 12(a) Event;
and (iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Right.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 12(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation (including, if applicable, the Corporation if it is the
surviving corporation); and
21
(ii) in the case of any transaction described in (z) of the
first sentence of this Section 12, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person, the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
(y) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares held by the public; and
(z) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligation set forth in this Section
12 in the same ratio as their direct or indirect interests in such Person bear
the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 12 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Sections 12(a) and (b) hereof and
confirming that all rights of first refusal or preemptive rights in respect of
the issuance of shares of Common Stock of such Principal Party upon exercise of
outstanding Rights have been waived and that such transactions shall not result
in a default by such Principal Party under the Rights Agreement, and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
12(a) hereof, such Principal Party will:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form; use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing; and use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Act) until the date of expiration of the
Rights, and similarly comply with applicable state securities laws;
(ii) 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;
22
(iii) 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; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act.
The provisions of this Section 12 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 12
shall be in addition to the rights to exercise Rights and adjustments under
Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 12 shall not be applicable to a transaction described in subparagraph
(x) or (y) of Section 12(a) if: (i) such transaction is consummated with a
Person or Persons which acquired shares of Common Stock pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per share of Common Stock offered in such transaction is not less than the
price per share of Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such Permitted Offer; and (iii) the form
of consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation of any
such transaction contemplated by this Section 12(d), all Rights hereunder shall
expire.
Section 13. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 12
of this Agreement, the Company shall (a) promptly prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Common Stock and Preferred Stock, a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate (or if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock in accordance with Section 25 of this Agreement).
Notwithstanding the foregoing sentence, the failure of the Company to make such
certificates or give such notice shall not affect the validity or the force or
effect of the requirement for such adjustment, and, prior to the earlier to
occur of the Distribution Date and the Stock Acquisition Date, the Company may,
in its discretion, satisfy the obligation set forth in clause (c) above by
including such summary in its next regular report to shareholders. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained. Any adjustment to be made pursuant to Sections 11
and 12 of this Agreement shall be effective as of the date of the event giving
rise to such adjustment.
23
Section 14. Fractional Rights and Fractional Shares.
(a) Except as provided in Section 11(i), 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, at the election
of the Company, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractions of Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker (selected by the Board of Directors) making a market
in the Rights. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date, as determined in good
faith by the Board of Directors, shall be used.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights, or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock. With respect to
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, if the Company does not issue
fractional shares of depositary receipts in lieu thereof, the Company shall pay
to the registered holders of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
24
(c) The Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights pursuant to Sections 11(a)(ii) or
12(a) hereof or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Common Stock. For the purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of a share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right, by the acceptance of such Right,
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 14.
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
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, any registered holder of the Common Stock), 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 Stock), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder, 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 such Right, 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 shall be evidenced by
the certificates for shares of Common Stock registered in the name of the
holders of such shares (which certificates for shares of Common Stock shall also
constitute certificates for Rights) and each Right will be transferable only in
connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate form and certificates fully executed;
25
(c) subject to Section 6 and Section 7(f) hereof, 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 certificate for
Common Stock) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated certificate for Common Stock made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, that prohibits or otherwise restrains the
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right or Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
26
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to all or
substantially all of the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the counter signature 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 Certificate either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the counter
signature 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 (which may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and
27
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proven and established by a certificate signed or
reasonably believed by the Rights Agent to be 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 any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificate (except its countersignature thereof) or be required to verify the
same, and all such statements and recitals are and shall be deemed to have been
made by the Company only.
(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
or any adjustment required under the provisions of Sections 11 or 12 or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustments
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of the certificate described in Section 12 hereof); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock or Preferred Stock 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.
28
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from 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 to be taken 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 the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys, or agents, or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes in good faith that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and, subsequent
to the Distribution Date, 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
29
Agent. If the Company shall fail to make such appointment within a period of 30
days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or one of the States thereof, 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 authority and which has at the time of its appointment as Rights Agent,
a combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and, subsequent
to the Distribution Date, mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by resolution of its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind of class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) At any time prior to the earlier of (i) the time that any Person
becomes an Acquiring Person, or (ii) the Final Expiration Date, the Board of
Directors may, at its option, redeem all, but not less than all, the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The Company may, at its
option, pay the Redemption Price either in shares of Common Stock (based on the
"current market price" per share as defined in Section 11(d) hereof, of the
shares of Common Stock at the time of redemption) or cash; provided, however,
that if the Company elects to pay the Redemption Price in shares of Common
Stock, the Company shall not be required to issue any fractional shares of
Common Stock and the number of shares of Common Stock issuable to each holder of
Rights shall be rounded down
30
to the next whole share. The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights in accordance with Section 23(a) and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the action
of the Company ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights in the manner set forth in Section 26, provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. 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 and other
than in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) Subject to Section 24 (c) and 24(d), the Board of Directors may,
at any time after the time that any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e))
for shares of Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any Benefit Plan, any entity holding shares of Common Stock for or pursuant to
the terms of any Benefit Plan, or any trustee, administrator or fiduciary of any
Benefit Plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights in accordance with Section 24(a) and
without any further action and without any notice, the right to exercise such
rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is
31
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 shares of Common Stock for Rights will be effected and,
in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued (and not reserved
for issuance other than upon exercise of the Rights) to permit any exchange of
Rights as contemplated in accordance with this Section 24, the (i) Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights, or (ii) the Board of
Directors may determine to exchange shares of Common Stock for then outstanding
and exercisable Rights at such exchange ratio of less than one share of Common
Stock per Right, appropriately adjusted as set forth in Section 24(a) above, so
that all (and not less than all) of the shares of Common Stock issued but not
outstanding or authorized but unissued (and not reserved for issuance other than
upon exercise of the Rights) are issued in the exchange contemplated by this
Section 24.
(d) In any exchange pursuant to this Section 24, the Corporation, at
its option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the initial
rate of one common stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend liquidation and voting
rights of common stock equivalents pursuant to the terms thereof, so that each
common stock equivalent delivered in lieu of each share of Common Stock shall
have essentially the same dividend, liquidation and voting rights as one share
of Common Stock.
Section 25. Notice of Certain Events.
(a) In case the Company propose, at any time after the Distribution
Date, (i) to declare or pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the holders
of its Preferred Stock (other than a regular quarterly cash dividend out of
earnings on retained earnings of the Company) or (ii) to offer to the holders of
its Preferred Stock options, rights or warrants to subscribe for or to purchase
any additional Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger with or into any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), 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 transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each
32
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 to the
extent feasible and file a certificate with the Rights Agent to that effect,
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 is to take place and the date of participation
therein by the holders of record of the shares of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Preferred Stock, whichever
shall be the earlier. The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date, a filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of the
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 25 hereof, notice of
the occurrence of such event, which notice shall specify the event and the
consequences thereof to holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in Section 25(a) hereof to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
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:
Computer Horizons Corp.
00 Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: Chairman of the Board
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
33
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Registrar and Transfer Company
00 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Tatler
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. Prior to the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment,
provided that the proposed supplement or amendment does not adversely affect the
rights or obligations of the Rights Agent under Section 18 or Section 20. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
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. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this
34
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement) and whether any proposed amendment
adversely affects the interests of the holders of Rights Certificates. All such
actions, calculations, interpretations and determinations (including, for
purpose of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, (x) shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right Certificates
and all other parties, and (y) shall not subject the Board to any liability to
the holders of the Right Certificates.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, registered holders of the Common Stock) 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, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts to be made and performed entirely within the State of New York.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
35
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first written above.
COMPUTER HORIZONS CORP.
By:
-------------------------------
Name:
Title:
REGISTRAR AND TRANSFER COMPANY
By:
-------------------------------
Name:
Title:
36
Exhibit A
FORM OF CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
COMPUTER HORIZONS CORP.
Under Section 805 of the Business Corporation Law
--------------------------
WE THE UNDERSIGNED, Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx, being
respectively the Chairman of the Board and President, and Executive Vice
President and Secretary, of Computer Horizons Corp. (the "Corporation"), do
hereby certify:
1. The name of the Corporation is COMPUTER HORIZONS CORP.
2. The Certificate of Incorporation of the Corporation was filed by
the Department of State on March 21, 1969.
3. The Certificate of Incorporation of the Corporation, as
heretofore amended, is hereby further amended by the following provisions
stating the number, designation, relative rights, preferences and limitations of
a series of Preferred Stock, par value $.10 per share, of the Corporation,
designated as Series B Junior Participating Preferred Stock, as fixed by the
Board of Directors of the Corporation pursuant to the authority vested in it by
the Certificate of Incorporation, as amended, of the Corporation:
Series B Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as Series B Junior Participating Preferred Stock, $.10 Par Value (the
"Series B Preferred Stock") and the number of shares constituting such series
shall be 75,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series B Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants to
purchase, or upon the conversion of any outstanding securities issued by the
Corporation convertible into, Series B Preferred Stock.
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Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of shares of any series of
Preferred Stock ranking prior and superior to the Series B Preferred Stock with
respect to dividends, the holders of shares of Series B Preferred Stock, in
preference to the holders of Common Stock, $.10 par value, of the Corporation
(the "Common Stock") and of any other junior stock which may be outstanding,
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash (except as provided below) on the first day of August, November, February
and May in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series B Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 per share ($4.00 per annum), or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, plus 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend or distribution on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend or distribution payable in shares of Common Stock);
provided, however, that in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share ($4.00 per annum) on the Series B Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
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shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series B Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall accumulate but shall not bear interest. Dividends paid on
the shares of Series B Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Shares of Series B Preferred
Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment as hereinafter set
forth, each share of Series B Preferred Stock shall entitle the holder thereof
to 1,000 votes (and each one one-thousandth of a share of Series B Preferred
Stock shall entitle the holder thereof to one vote) on all matters submitted to
a vote of the stockholders of the Corporation. In the event the Corporation
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share
to which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, or by law, the holders of shares of Series B Preferred Stock and
the holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) In addition, the holders of shares of Series B Preferred Stock
shall have the following special voting rights:
(i) If at any time accrued dividends on any shares of Series B
Preferred Stock shall be in arrears in the full aggregate amount of the
last four quarterly dividends accrued thereon (whether or not
declared), the holders of Series B Preferred Stock and all other series
of Preferred Stock (in each case to the extent then entitled pursuant
to the terms of such series), voting together as one class, shall have
the exclusive and special right to
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elect two directors of the Corporation, and the number of directors
constituting the Board of Directors of the Corporation shall be
increased by two (if not previously increased in connection with the
right of other series of Preferred Stock entitled to vote together with
this Series to elect directors of the Corporation) for such purpose.
(ii) Whenever any such right of the holders of Series shall
have vested, such right may be exercised initially either at a special
meeting of the holders of Series B Preferred Stock and all other series
so entitled to vote, if any, called as hereinafter provided, or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders. The right of the holders of Series B Preferred Stock
voting separately as a class with such other series of Preferred Stock
to elect members of the Board of Directors of the Corporation as
aforesaid shall continue until such time as all dividends accrued on
all shares of Series B Preferred Stock shall have been paid in full, or
declared and set apart for payment, at which time the special right of
the holders of Series B Preferred Stock so to vote separately as a
class with such other series of Preferred Stock for the election of
directors shall terminate, subject to revesting in the event of each
and every subsequent occurrence of an arrearage specified in paragraph
(i) above.
(iii) At any time when such special voting power shall have
vested in the holders of Series B Preferred Stock as provided in the
preceding paragraph (i), the proper officer of the Corporation shall,
upon the written request of the holders of record of at least 10% of
the aggregate then outstanding voting power of shares of Series B
Preferred Stock and all other series of Preferred Stock entitled to
vote in the election of such directors addressed to the Secretary of
the Corporation, call a special meeting of the holders of Series B
Preferred Stock for the purpose of electing directors pursuant to this
Section 3(c). Such meeting shall be held at the earliest practicable
date. If such meeting shall not be called by the proper officer of the
Corporation within twenty days after personal service of such written
request upon the Secretary of the Corporation, or within twenty days
after mailing the same within the United States of America, by
registered mail addressed to the Secretary of the Corporation at its
principal office, then the holders of record of at least 10% of the
aggregate then outstanding voting power of shares of Series B Preferred
Stock and all other series of Preferred Stock entitled to vote in the
election of such directors may designate in writing one of their number
to call such meeting at the expense of the Corporation, and such
meeting may be called by such person so designated by giving the notice
required for annual meetings of stockholders. Any holder of Series B
Preferred Stock so designated shall have access to the stock books of
the Corporation for the purpose of causing meetings of shareholders to
be called pursuant to these provisions. Notwithstanding the provisions
of this paragraph (iii), no such special meeting shall be called during
the period within ninety days immediately preceding the date fixed for
the next annual meeting of shareholders.
(iv) At any meeting held for the purpose of electing directors
at which the holders of Series B Preferred Stock and any other series
of Preferred Stock shall have the
A-4
special right to elect directors as provided in this Section 3(c), the
presence, in person or by proxy, of the holders of one-third of the
voting power of the then outstanding aggregate number of shares of
Series B Preferred Stock and such other series of Preferred Stock shall
be required to constitute a quorum for the election of any director by
the holders of such series. At any such meeting or adjournment thereof,
(1) the absence of a quorum shall not prevent the election of directors
other than those to be elected by all such series of Preferred Stock
voting separately as a class, and the absence of a quorum for the
election of such other directors shall not prevent the election of the
directors to be elected by the Series B Preferred Stock and any other
series of Preferred Stock that may be voting with it separately as a
class, and (2) in the absence of either or both such quorums, the
holders of a majority of the voting power of the shares present in
person or by proxy of the stock or stocks which lack a quorum shall
have power to adjourn the meeting for the electing of directors who
they are entitled to elect from time to time without notice other than
announcement at the meeting until a quorum shall be present.
(v) During any period when the holders of Series B Preferred
Stock have the right to vote separately as a class for directors as
provided in this Section 3(c), (1) the directors so elected by the
holders of the one or more series of Preferred Stock entitled to vote
for such directors shall continue in office until the next succeeding
annual meeting or until their successors, if any, are elected by such
holders and qualify or, until termination of the right of the holders
of the one or more series of Preferred Stock entitled to vote for such
directors to vote separately as a class for directors as provided in
this Section 3(c) and (2) vacancies in the Board of Directors shall be
filled only by vote of a majority (even if that be only a single
director) of the remaining directors theretofore elected by the holders
of the one or more series of Preferred Stock which elected the
directors whose office shall have become vacant or, if there be no such
remaining director, directors to fill such vacancies shall be elected
by the holders of the one or more series of Preferred Stock then
entitled to vote for such directors at a special meeting called
pursuant to the provisions of paragraph (iii) hereof. Immediately upon
any termination of the right of the holders of Series B Preferred Stock
and any other series of Preferred Stock to vote separately as a class
for directors as provided in this Section 3(c), the term of office of
the directors then in office so elected by the holders of Series B
Preferred Stock and any such other series of Preferred Stock shall
terminate. Whenever the term of office of the directors so elected by
the holders of Series B Preferred Stock and any such other series of
Preferred Stock shall terminate and the special voting power vested in
the holders of Series B Preferred Stock and any such other series of
Preferred Stock as provided in this Section 3(c) shall have terminated,
the number of directors shall be such number as may be provided for in
the by-laws irrespective of any increase made pursuant to the
provisions of this Section 3(c).
Nothing herein shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series B
Preferred Stock, increasing the number of authorized shares of Preferred Stock
of the same class as the Series B Preferred Stock or the
A-5
number of authorized shares of Common Stock, or changing the par value of the
Common Stock or Preferred Stock, or issuing options, warrants, or rights to any
class of stock of this Corporation, as authorized by the Certificate of
Incorporation as now in effect or as it may hereafter be amended.
(e) So long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote of the
holders of two-thirds of the outstanding shares of Series B Preferred Stock,
given by such holders as one class, amend the Certificate of Incorporation in
any manner which would materially alter or change the powers, preferences or
special rights of this Series so as to affect them adversely. Except as provided
herein, in the Certificate of Incorporation of the Corporation or by law,
holders of shares of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration, any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions,
on or make any other distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except dividends paid
ratably on the Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) except as provided in the following paragraph (iv), redeem
or purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series B Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series B Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon
A-6
liquidation, dissolution or winding up) with the Series B Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
shares of Series B Preferred Stock and all such other shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective Series Bnd classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section (a),
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock, without designation as to series, and may be reissued as part
of a new series of preferred stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein, in the Restated Certificate of Incorporation, in any other
certificate of designation creating a series of preferred stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received the higher of (x) $1,000 per share plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (y) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Stock, or (ii) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except distributions made ratably on the Series B Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series B Preferred Stock were entitled immediately prior to such event
under clause (i) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock
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outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, or otherwise changed, then in any
such case each share of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Corporation shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series B Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable.
Section 9. Rank. Unless otherwise provided in the Certificate of
Incorporation of the Corporation or a Certificate of Designation relating to a
subsequent series of preferred stock of the Corporation, the Series B Preferred
Stock shall rank junior to all other series of the Corporation's preferred stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up, and senior to the Common Stock of this Corporation.
Section 10. Fractional Shares. Series B Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
A-8
4. The amendment referred to herein was authorized by
resolution duly adopted by the Board of Directors of the Corporation at a
meeting thereof duly called and held on July 13, 1999, at which a quorum was
present and acting throughout.
IN WITNESS WHEREOF, we have signed this Certificate this 14th day of
July, 1999, and we affirm the statements contained herein are true under the
penalties of perjury.
------------------------------------------
Xxxx X. Xxxxxxx
Chairman of the Board and President
------------------------------------------
Xxxxxxx X. Xxxxxx
Executive Vice President, Chief Financial
Officer and Secretary
A-9
Exhibit B
Form of Right Certificate
Certificate No. R-____ ____ Rights
NOT EXERCISABLE AFTER THE EARLIER OF JULY 15, 2009 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, MAY BE NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]1
RIGHT CERTIFICATE
COMPUTER HORIZONS CORP.
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 13, 1999 (the "Rights Agreement"), between Computer
Horizons Corp., a New York corporation (the "Company"), and Registrar and
Transfer Company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as defined in the Rights Agreement) and prior to
the Expiration Date, one one-thousandth of a fully paid, nonassessable share of
the Series B Junior Participating Preferred Stock, par value of $.10 (the
"Preferred Stock"), of the Company, at a purchase price of $90 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price") upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
--------------
1 If applicable, insert this portion of the legend and delete the
preceding sentence.
B-1
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) set forth above
and the Purchase Price set forth above, are as of July 13, 1999, and may have
been, or in the future may be, adjusted as a result of the occurrence of certain
events, as more fully set forth in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as set forth in the
Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder thereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of Rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the time that any
Person becomes an Acquiring Person or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right (subject to adjustment); or
(b) at any time after the time that any Person becomes an
Acquiring Person (but before such Person, together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding), exchange all or part of
the then outstanding Rights (other than Rights held by the Acquiring
Person and certain related Persons) for Common Shares at an exchange
ratio of one Common Share per Right (subject to adjustment).
B-2
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts); but
in lieu thereof, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate as such shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred Stock
or of any other securities of the Company which may at any time be issuable upon
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 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 Rights evidenced by this Right Certificate have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of
Attest: COMPUTER HORIZONS CORP.
By:_________________________ By:_____________________________
Secretary Title:
Countersigned:
[ ]
By:_________________________
Authorized Signature
B-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 Right Certificate on the books of the Company named
within, with full power of substitution.
Dated:_________________________ Signature______________________
Signature Guaranteed:
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any Acquiring Person.
Dated:_________________________ Signature______________________
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the Right
Certificate.)
To: COMPUTER HORIZONS CORP.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the one one-thousandths of a
share of Preferred Stock (or such other number or kind of securities of the
Company or of any other person which may be issuable upon the exercise of such
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security or other identifying number
(Please print name and address)
Should the number of Rights being exercised hereunder 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 must conform in all
respects to the name of the holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any Acquiring Person.
Dated:
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-7
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On July 13, 1999, the Board of Directors of Computer Horizons Corp.
(the "Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of Common Stock, $.10 par value, of
the Company (the "Common Stock"), payable to the stockholders of record on July
16, 1999 (the "Record Date"). The Board of Directors also authorized and
directed the issuance of one Right with respect to each Share of Common Stock
issued thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to shares of Common Stock issued after the
Distribution Date.
Except as set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase one one-thousandth of a share of
Series B Junior Participating Preferred Stock, $.10 par value (the "Preferred
Stock"), at a price of $90, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Registrar and Transfer Company, as
Rights Agent (the "Rights Agent"), dated as of July 13, 1999.
Initially, the Rights will be attached to all certificates representing
shares of Common Stock then outstanding, and no separate Right Certificates will
be distributed. The Rights will separate from the shares of Common Stock upon
the earliest to occur of (i) a person or entity (a "Person") or group of
affiliated or associated Persons (a "Group") having acquired beneficial
ownership of 20% or more of the outstanding shares of Common Stock (except
pursuant to a Permitted Offer, as hereinafter defined); or (ii) 10 business days
(or such later date as the Board of Directors may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a Person or Group
becoming an Acquiring Person (as hereinafter defined) (the earliest of such
dates being called the "Distribution Date"). A Person or Group whose acquisition
of shares of Common Stock causes a Distribution Date pursuant to clause (i)
above is an "Acquiring Person." The date that a Person or Group becomes an
Acquiring Person is the "Shares Acquisition Date."
In addition, a Person who acquires shares of Common Stock pursuant to a
tender or exchange offer which is for all outstanding shares of Common Stock at
a price and on terms which the Board of Directors determines (prior to
acquisition) to be adequate and in the best interests of the Company and its
stockholders (other than such Person, its affiliates and associates) (a
"Permitted Offer") will not be deemed to be an Acquiring Person and such
Person's ownership will not constitute a Distribution Date.
The shares of Preferred Stock purchasable upon exercise of the Rights
will have a minimum preferential quarterly dividend of $1.00 per share, but will
be entitled to receive, in the aggregate, a dividend of one thousand times the
dividend declared on the shares of Common Stock. In the event of liquidation,
the holders of the shares of Preferred Stock will be entitled to
C-1
receive a minimum liquidation payment of $1,000 per share, but will be entitled
to receive an aggregate liquidation payment equal to one thousand times the
payment made per share of Common Stock. Each share of Preferred Stock will have
one thousand votes, voting together with the shares of Common Stock. In the
event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each share of Preferred Stock will be entitled to
receive one thousand times the amount and type of consideration received per
share of Common Stock. The rights of the shares of Preferred Stock as to
dividends and liquidation, and in the event of mergers and consolidation, are
protected by customary anti-dilution provisions.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the shares of Common Stock. Until
the Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon the transfer or new
issuance of shares of Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date (and to each initial record
holder of certain shares of Common Stock issued after the Distribution Date),
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date, and will
expire at the close of business on July 15, 2009, unless earlier redeemed by the
Company as described below.
In the event that any person becomes an Acquiring Person, each holder
of Rights (other than Rights that have become null and void as described below)
will thereafter have the right (the "Flip-In Right") to receive, upon exercise
of such Rights, the number of shares of Common Stock (or, in certain
circumstances, other securities of the Company) having a value (immediately
prior to such triggering event) equal to two times the aggregate exercise price
of such Rights. For example, if a Person became an Acquiring person at a time
when the current per share market price of the Company's Common Stock was $18
and the Purchase Price was $90, each holder of a Right (other than a Right which
has become null and void as described herein) would have the right to receive
ten shares of Common Stock upon exercise of the Right and payment of the
Purchase Price of $90.
The Board, at its option, may exchange each Right (other than those
that have become null and void as described below) for one share of Common Stock
in lieu of the Flip-In Right, provided no Person is the beneficial owner of 50%
or more of the shares of Common Stock at the time of such exchange.
Notwithstanding the foregoing, following the occurrence of the event described
above, all Rights that are or (under certain circumstances specified in the
Rights
C-2
Agreement) were beneficially owned by any Acquiring Person or any affiliate or
associate thereof or certain transferees thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding shares of Common
Stock immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power, or (ii) more than
50% of the Company's assets or earning power is sold or transferred, then each
holder of Rights (except Rights which previously have been voided as set forth
above) shall thereafter have the right (the "Flip-Over Right") to receive, upon
exercise of such Rights, shares of Common Stock of the acquiring company (or in
certain circumstances, its parent) having a value equal to two times the
aggregate exercise price of the Rights. The Flip-Over Right shall not apply to
any transaction described in clause (i) if such transaction is with a Person or
Persons (or a wholly owned subsidiary of any such Person or Persons) that
acquired shares of Common Stock pursuant to a Permitted Offer and the price and
form of consideration offered in such transaction is the same as that paid to
all holders of Common Stock whose shares were purchased pursuant to the
Permitted Offer. The holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of shares of Common Stock or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Common Stock, (ii)
upon the grant to holders of the Common Stock of certain rights or warrants to
subscribe for or purchase shares of Common Stock at a price, or securities
convertible into shares of Common Stock with a conversion price, less than the
then current market price of the Common Stock, or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Common Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective at such time, on such
basis and with such conditions as the Board of Directors may establish in its
sole discretion. The Company may, at its option, pay the Redemption Price in
Common Stock.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Distribution Date. After the Distribution Date,
the provisions of the Rights
C-3
Agreement may be amended by the Board in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or, subject
to certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders of the Company, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
C-4
INDEX
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................5
Section 3. Issue of Right Certificates......................................5
Section 4. Form of Right Certificates.......................................7
Section 5. Countersignature and Registration................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.....................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....9
Section 8. Cancellation and Destruction of Right Certificates. ............11
Section 9. Reservation and Availability of Capital Stock...................11
Section 10. Preferred Stock Record Date.....................................12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. ........................................................13
Section 12. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power...........................................................20
Section 13. Certificate of Adjusted Purchase Price or Number of Shares......23
Section 14. Fractional Rights and Fractional Shares.........................24
Section 15. Rights of Action................................................25
Section 16. Agreement of Right Holders......................................25
Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder.....................................................26
Section 18. Concerning the Rights Agent. ...................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......27
Section 20. Duties of Rights Agent..........................................27
(i)
Section 21. Change of Rights Agent..........................................29
Section 22. Issuance of New Right Certificates..............................30
Section 23. Redemption......................................................30
Section 24. Exchange........................................................31
Section 25. Notice of Certain Events........................................32
Section 26. Notices.........................................................33
Section 27. Supplements and Amendments......................................34
Section 28. Successors......................................................34
Section 29. Determinations and Actions by the Board of Directors............34
Section 30. Benefits of this Agreement. ....................................35
Section 31. Severability....................................................35
Section 32. Governing Law...................................................35
Section 33. Counterparts....................................................35
Section 34. Descriptive Headings............................................36
Exhibit A....................................................................A-1
Exhibit B....................................................................B-1
Exhibit C....................................................................C-1
(ii)
