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EXHIBIT 4.2
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EXPRESSJET HOLDINGS, INC.
And
MELLON INVESTOR SERVICES LLC
Rights Agent
RIGHTS AGREEMENT
Dated as of ____________, 2001
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TABLE OF CONTENTS
Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent....................................................................11
Section 3. Issue of Right Certificates....................................................................11
Section 4. Form of Right Certificates.....................................................................14
Section 5. Countersignature and Registration..............................................................15
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates...................................................16
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights..................................17
Section 8. Cancellation and Destruction of Right Certificates.............................................19
Section 9. Status and Availability of Preferred Shares....................................................20
Section 10. Preferred Shares Record Date...................................................................21
Section 11. Adjustment of Exercise Price, Number of Shares or Number of Rights.............................21
Section 12. Certificate of Adjustment......................................................................33
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................33
Section 14. Fractional Rights and Fractional Shares........................................................35
Section 15. Rights of Action...............................................................................37
Section 16. Agreement of Right Holders.....................................................................38
Section 17. Right Certificate Holder Not Deemed a Stockholder..............................................39
Section 18. Concerning the Rights Agent....................................................................40
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................41
Section 20. Duties of Rights Agent.........................................................................42
Section 21. Change of Rights Agent.........................................................................46
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Section 22. Issuance of New Right Certificates.............................................................48
Section 23. Redemption.....................................................................................48
Section 24. Exchange.......................................................................................50
Section 25. Notice of Certain Events.......................................................................52
Section 26. Notices........................................................................................53
Section 27. Supplements and Amendments.....................................................................54
Section 28. Successors.....................................................................................56
Section 29. Benefits of this Agreement.....................................................................56
Section 30. Severability...................................................................................56
Section 31. Governing Law..................................................................................56
Section 32. Counterparts...................................................................................57
Section 33. Descriptive Headings...........................................................................57
Section 34. Administration.................................................................................57
Section 35. Additional Agreement...........................................................................57
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RIGHTS AGREEMENT
Rights Agreement (this "Agreement"), dated as of ____________,
2001 between ExpressJet Holdings, Inc., a Delaware corporation (the "Company"),
Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights Agent"), and Continental Airlines, Inc., a Delaware corporation
("Continental") (for purposes of Sections 27, 29 and 35 of this Agreement).
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) outstanding at the Close of Business on
_____________, 2001 (the "Record Date"), and has authorized the issuance of one
Right with respect to each additional Common Share that shall become outstanding
between the Record Date and the earliest of the Close of Business on the
Distribution Date, the Redemption Date and the Close of Business on the Final
Expiration Date (as such terms are hereinafter defined), and certain additional
Common Shares that shall become outstanding after the Distribution Date as
provided in Section 22 of this Agreement, each Right representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter defined), or
such different amount or kind of securities as is herein provided upon the terms
and subject to the conditions herein set forth.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of Common Shares representing 15%
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or more (or, if such Person is an Institutional Investor, 20% or more) of the
Voting Power of the Common Shares of the Company then outstanding.
Notwithstanding the foregoing, no Person shall (1) be or become an Acquiring
Person if such Person is an Exempt Person (so long as such Person remains an
Exempt Person), (2) become an Acquiring Person as the result of (A) an
acquisition of Common Shares by the Company or (B) the conversion of Class B
Common Shares into Class A Common Shares, which, by reducing the number or
Voting Power of Common Shares outstanding, increases the Voting Power of the
Common Shares beneficially owned by such Person to 15% or more (or, if such
Person is an Institutional Investor, 20% or more) of the Voting Power of the
Common Shares of the Company then outstanding; provided, however, that if a
Person shall so become the Beneficial Owner of Common Shares representing 15% or
more (or, if such Person is an Institutional Investor, 20% or more) of the
Voting Power of the Common Shares of the Company then outstanding by reason of
the acquisition of Common Shares by the Company or the conversion of Class B
Common Shares into Class A Common Shares, and shall, after such share purchases
by the Company or such conversion, purchase or otherwise take action to cause it
to become the Beneficial Owner of Common Shares representing an additional 1% of
the Voting Power of the Common Shares of the Company then outstanding, then such
Person shall be an Acquiring Person, (3) become an Acquiring Person if (A) such
Person becomes the Beneficial Owner of Common Shares representing 15% or more
(or, if such Person is an Institutional Investor, 20% or more) of the Voting
Power of the Common Shares then outstanding solely as the result of an
adjustment to the Voting Power of the Common Shares beneficially owned by such
Person due to the application of Article Four or Article Eight of the Restated
Certificate of Incorporation and related provisions of the Company's bylaws and
(B) immediately prior to such adjustment, such Person did not beneficially own
Common Shares representing 15% or more (or, if such Person is an Institutional
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Investor, 20% or more) of the Voting Power of the Common Shares then
outstanding; provided, however, that if a Person shall so become the Beneficial
Owner of Common Shares representing 15% or more (or, if such Person is an
Institutional Investor, 20% or more) of the Voting Power of the Common Shares of
the Company then outstanding by reason of such adjustment, and shall, after such
adjustment, purchase or otherwise take action to cause it to become the
Beneficial Owner of Common Shares representing an additional 1% of the Voting
Power of the Common Shares of the Company then outstanding, then such Person
shall be an Acquiring Person, or (4) be or become an Acquiring Person if the
Board of Directors determines in good faith that a Person who would otherwise be
an Acquiring Person, as defined pursuant to the foregoing provisions of this
paragraph, has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing provisions
of this paragraph, then such Person shall not be an Acquiring Person for any
purposes of this Agreement. Notwithstanding any of the foregoing, in the event
that the Board of Directors determines in good faith that a Person no longer
meets the requirements set forth in the definition of "Institutional Investor,"
then such Person shall as promptly as practicable divest itself of a sufficient
number of Common Shares so that such Person beneficially owns Common Shares
representing less than 15% of the Voting Power of the Common Shares then
outstanding. If the Board of Directors determines in good faith that such Person
does not divest itself of Common Shares in accordance with the requirements set
forth in the prior sentence, then such Person shall be or become an "Acquiring
Person" for any and all purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement.
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"Approved Affiliate" shall mean, with respect to a Person, one
or more of the Affiliates of that Person that becomes such with the prior
approval of that Person.
A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the satisfaction of
one or more conditions) pursuant to any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), written or
otherwise, 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 the Beneficial Owner of, or beneficially own,
securities tendered pursuant to a tender or exchange offer made pursuant to, and
in accordance with, the applicable rules and regulations promulgated under the
Exchange Act 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; (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be the Beneficial
Owner of, or beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule l3D under the Exchange Act (or any comparable or
successor report); or (C) "beneficial
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ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Agreement);
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), written or
otherwise, for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to section (B) of the immediately preceding
paragraph (ii)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
"Board of Directors" means the board of directors of the
Company.
"Business Day" shall mean any day other than a Saturday,
Sunday, holiday or a day on which banking institutions in the City of Houston,
Texas or the State of New Jersey are authorized or obligated by law or executive
order to close.
"CAL" shall mean Continental and its Controlled Affiliates and
its Approved Affiliates.
"Capacity Purchase Agreement" shall mean that certain Capacity
Purchase Agreement, dated as of January 1, 2001, among the Company, Continental
and ExpressJet Airlines, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company.
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"Class A Common Shares" shall mean shares of the Class A
Common Stock, par value $.01 per share, of the Company.
"Class B Common Shares" shall mean shares of the Class B
Common Stock, par value $.01 per share, of the Company.
"Close of Business" on any given date shall mean 5:00 p.m.,
central time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., central time, on the next succeeding
Business Day.
"Common Shares" when used with reference to the Company shall
mean the Class A Common Shares and Class B Common Shares. "Common Shares" when
used with reference to any Person other than the Company (or, in the event of a
transaction referred to in Section 13 hereof, if the Company is the surviving
corporation or the successor when thereafter used with reference to the Company)
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
"common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii)(B)(3) hereof.
"Continental" shall have the meaning set forth in the recitals
hereof.
"Continuing Directors" shall mean those directors who were
members of the Board of Directors of the Company at the time the Company entered
into this Agreement and any director who subsequently becomes a member of the
Board of Directors, if such director's nomination for election or appointment to
the Board of Directors is recommended or approved by the majority vote of the
Continuing Directors then in office.
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"Control" (including "controlled by") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Controlled Affiliate" shall mean, with respect to a Person,
one or more of the Affiliates of that Person that is directly or indirectly
controlled by that Person.
"Current Value" shall have the meaning set forth in Section
11(a)(iii)(A)(1) hereof.
"Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
"equivalent preferred shares" shall have the meaning set forth
in Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
"Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or any
Subsidiary of the Company, (iv) any entity holding Common Shares for or pursuant
to the terms of any such employee benefit plan, (v) CAL, until the end of the
Term (as defined in the Capacity Purchase Agreement), unless at such time CAL
beneficially owns Common Shares representing at least 5% of the Voting Power of
the Common Shares then outstanding, in which case until such time as CAL ceases
to beneficially own Common Shares representing at least 5% of the Voting Power
of the Common Shares then outstanding and (vi) subject to the remainder of this
paragraph, any Person who or which, together with its Affiliates or Associates
(collectively, an "Exempt Recipient"), becomes the Beneficial Owner of Common
Shares representing 15% or more of the Voting Power of the Company then
outstanding as a result of any action by or transaction with CAL with respect to
the Common Shares of which CAL is the Beneficial Owner (an "Exempt
Transaction"). The highest percentage of Voting Power of the Common Shares
beneficially owned by an Exempt Recipient immediately
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following any Exempt Transaction is hereafter referred to as the "Permitted
Percentage" with respect to such Exempt Recipient. The Permitted Percentage with
respect to an Exempt Recipient will automatically be reduced (but not below 14%
(19% if such Person is an Institutional Investor) of the Voting Power of the
Common Shares of the Company then outstanding) if such Exempt Recipient ceases
to beneficially own any of such Common Shares or the Voting Power of the Common
Shares beneficially owned by such Exempt Recipient otherwise decreases, and
increased as necessary upon (i) the acquisition of Common Shares by the Company,
(ii) the conversion of Class B Common Shares into Class A Common Shares or (iii)
an adjustment to the Voting Power of the Common Shares beneficially owned by
such Person due to the application of Article Four or Article Eight of the
Restated Certificate of Incorporation and related provisions of the Company's
bylaws. An Exempt Recipient shall cease to be an Exempt Person at any time such
Exempt Recipient purchases or otherwise takes action causing it to become the
Beneficial Owner of Common Shares representing an additional 1% of the Voting
Power of the Common Shares of the Company above the Permitted Percentage then
applicable to such Exempt Recipient. In determining the percentage of the Voting
Power of the Common Shares beneficially owned by an Exempt Recipient, the
Company may rely on information set forth in or derived from any Schedule on
file with the Securities and Exchange Commission pursuant to the requirements of
Rule 13d-1 under the Exchange Act filed by such Exempt Recipient.
"Exercise Price" shall have the meaning set forth in Section
7(b).
"Final Expiration Date" shall mean _____________, 2011.
"Institutional Investor" shall mean a Person who has a
Schedule 13G on file with the Securities and Exchange Commission pursuant to the
requirements of Rule 13d-1 under the
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Exchange Act with respect to its holdings of the Company's voting securities
("Schedule 13G"), so long as (i) such Person is principally engaged in the
business of managing investment funds for unaffiliated securities investors and,
as part of such Person's duties as agent for fully managed accounts, holds or
exercises voting or dispositive power over Common Shares, (ii) such Person
acquires Beneficial Ownership of Common Shares pursuant to trading activities
undertaken in the ordinary course of such Person's business and not with the
purpose nor the effect, either alone or in concert with any Person, of
exercising the power to direct or cause the direction of the management and
policies of the Company or of otherwise changing or influencing the control of
the Company, nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction subject to Rule
13d-3(b) of the Exchange Act and (iii) if such Person is a Person included in
Rule 13d-1(b)(1)(ii) of the Exchange Act, such Person is not obligated to, and
does not, file a Schedule 13D with respect to the securities of the Company.
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership, business trust,
limited liability company, unincorporated association, or joint venture or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall mean the shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
such rights and preferences as are set forth in the form of Certificate of
Designation set forth as Exhibit A hereto, as the same may be amended from time
to time.
"Record Date" shall have the meaning set forth in the recitals
hereof.
"Redemption Date" shall have the meaning set forth in Section
23 hereof.
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"Redemption Price" shall mean $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof.
"Required Board Vote" shall mean approval of an action by the
Board of Directors by the affirmative vote of two-thirds of the Whole Board,
including the affirmative vote of two-thirds of the Continuing Directors then in
office; provided that with respect to any action to amend, eliminate or
otherwise change clause (v) of the definition of Exempt Person or to change this
definition of "Required Board Vote," the term "Required Board Vote" shall mean,
until the end of the Term (as defined in the Capacity Purchase Agreement),
unless at such time CAL beneficially owns Common Shares representing at least 5%
of the Voting Power of the Common Shares then outstanding, in which case until
such time as CAL ceases to beneficially own Common Shares representing at least
5% of the Voting Power of the Common Shares then outstanding, approval of such
action by the unanimous affirmative vote of the Whole Board.
"Restated Certificate of Incorporation" shall mean the
Company's Restated Certificate of Incorporation filed with the Secretary of
State of the State of Delaware on ____________, 2001, as the same may be amended
from time to time.
"Right Certificate" shall mean a certificate evidencing a
Right in substantially the form of Exhibit B hereto.
"Rights Agent" shall have the meaning set forth in the
recitals hereof.
."Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
"Section 13 Trigger Date" shall have the meaning set forth in
Section 13 hereof.
"Shares Acquisition Date" shall mean the earlier of the date
of (i) the public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such
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or (ii) the public disclosure of facts by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section
11(a)(iii)(A) hereof.
"Subsidiary" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to
Purchase Preferred Shares in substantially the form of Exhibit C hereto.
"Voting Power" shall mean the total number of votes entitled
to be cast by the holders of the Common Shares of the Company then outstanding
taking into account the operation of Article Four and Article Eight of the
Restated Certificate of Incorporation and related provisions of the Company's
bylaws.
"Whole Board" shall mean the total number of authorized
directors regardless of whether there exist any vacancies in such authorized
directorships.
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. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
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Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth day after the Shares
Acquisition Date or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than an Exempt Person) of, or of the first public announcement of the
intention of any Person (other than an Exempt Person) to commence, a tender or
exchange offer the consummation of which could result in any Person becoming an
Acquiring Person (such earlier date 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 Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates other than for purposes of this Section 3 and
any provision of this Agreement referring to the issuance or distribution of
Right Certificates) and not by separate Right Certificates, and (y) the Rights
(and the right to receive Right Certificates) will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Company has notified the Rights Agent in writing of the occurrence of the
Distribution Date, and if such notification is given orally, the Company shall
confirm the same in writing on or prior to the Business Day next following, the
Company will prepare and execute, (and, if at such time, the Rights Agent is not
also the Company's transfer agent, provide the Rights Agent with a list of
stockholders (together with all other necessary information)), the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send at the expense of the Company) by first-class,
insured, postage-prepaid mail (or such other method of delivery selected by the
Company), to each record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one Right for each Common
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Share so held (subject to adjustment as provided in this Agreement). Until such
notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that the Distribution Date has not occurred. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates representing Common Shares
outstanding as of the Record Date, until the Close of Business on the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof, together with a copy of the Summary of
Rights attached thereto. Until the Close of Business on the Distribution Date
(or the earlier of the Redemption Date or the Close of Business on the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares evidenced thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Close of Business on the Distribution Date, the Redemption Date or the
Close of Business on the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them substantially the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights (the "Rights") as set forth in the Rights
Agreement between ExpressJet Holdings, Inc. and Mellon
Investor Services LLC, dated as of ____________, 2001 as it
may from time to time be amended or supplemented pursuant to
its terms (the "Rights Agreement"), the terms of which are
hereby incorporated herein by
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reference. A copy of the Rights Agreement is on file at the
principal executive offices of ExpressJet Holdings, Inc. Under
certain circumstances set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Mellon Investor
Services LLC 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, Rights
that are or were acquired or beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) may become null
and void.
With respect to such certificates containing the foregoing legend, until the
Close of Business on the Distribution Date, the Rights associated with the
Common Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Close of Business on the
Distribution Date, any Rights associated with such Common Shares shall be
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares that are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate, provided that such marks, legends, summaries and endorsements do
not affect the rights, duties or responsibilities of the Rights Agent and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the other
provisions of this Agreement, the Right Certificates shall entitle the holders
thereof to purchase such number of
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one one-thousandths of a Preferred Share as shall be set forth therein at the
Exercise Price, but the number of one one-thousandths of a Preferred Share and
the Exercise Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature; shall have affixed
thereto the Company's seal or a facsimile thereof; and shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Agent shall countersign the Right Certificates,
either manually or by facsimile signature, and the Right Certificates shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nonetheless be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
Following the Distribution Date and receipt by the Rights
Agent of written notice to that effect and all other relevant information, the
Rights Agent will keep or cause to be kept, at its office designated for such
purpose, books for registration of the transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the
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Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at
any time after the Close of Business on the Distribution Date, and prior to the
earlier of the Redemption Date or the Close of Business on the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become null and void pursuant to Section 11(a)(ii)
hereof or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the 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 Certificate until the registered holder shall have properly
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 or the Rights Agent shall
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
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require payment of a sum sufficient for any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section 6 or any other similar provision of this Agreement unless and until it
is satisfied that all such taxes and/or governmental charges have been paid in
full.
(b) Upon receipt by the Company and the Rights Agent of
evidence satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Company's or the Rights Agent's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.
(a) The registered holder of any Right Certificate
(other than a holder whose Rights have become null and void pursuant to Section
11(a)(ii) hereof or have been exchanged pursuant to Section 24 hereof) may
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at its office designated for such purpose, together with payment of the
Exercise Price for each one one-thousandth of a Preferred Share as to which the
Rights are exercised, prior to the earliest of (i) the Close of Business on the
Final Expiration Date, (ii) the time at which the right to exercise the Rights
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terminates pursuant to Section 23 hereof, or (iii) the time at which the right
to exercise the Rights terminates pursuant to Section 24 hereof.
(b) The purchase price for each one one-thousandth of a
Preferred Share to be purchased upon the exercise of a Right shall initially be
__________________________ (the "Exercise Price"), shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof, and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certificate duly
executed, accompanied by payment of the Exercise Price for the number of one
one-thousandths of a Preferred Share to be purchased and an amount equal to any
applicable tax or governmental charge required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares certificates for the number of one one-thousandths of a
Preferred Share to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) requisition from any
depositary agent for the Preferred Shares depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs any such depositary agent to comply with such request,
(ii) when necessary to comply with this Agreement, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional Preferred Shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the
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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 necessary to
comply with this Agreement, after receipt, deliver the cash described in clause
(iii) above to or upon the order of the registered holder of such Right
Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing the unexercised Rights 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 6 and Section 14
hereof.
(e) 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 following
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for 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 or the Rights Agent shall
reasonably request.
(f) The Rights Agent shall have no liability to any
holder of Rights or any other Person as a result of the Company's failure to
make any determination under this Section 7 or any other section with respect to
an Acquiring Person or an Affiliate or Associate of an Acquiring Person or
transferees hereunder.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for
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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 the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all 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. Status and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Exercise
Price), be duly and validly authorized and issued and fully paid and
non-assessable shares.
(b) The Company further covenants and agrees that it
will pay when due and payable any and all taxes and governmental charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any tax or charge which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise; or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by
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the holder of such Right Certificate at the time of surrender); or until it has
been established to the Company's reasonable satisfaction that no such tax or
charge is due.
(c) The Company covenants and agrees that it will cause
to be reserved and kept available, out of its authorized and unissued Preferred
Shares or any Preferred Shares held in its treasury, the number of Preferred
Shares that will be sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7 hereof.
Section 10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes have become the holder of record of the Preferred Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Exercise Price (and any applicable transfer taxes or governmental charges)
was made. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number of Shares or
Number of Rights. The Exercise Price, the number of Preferred Shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of
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the Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Exercise
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right.
(ii) Subject to the following paragraph of this
subparagraph (ii) and to Section 24 of this Agreement, in the event any Person
shall become an Acquiring Person, each holder of a Right shall thereafter have a
right to receive, upon exercise thereof at a price equal to the then current
Exercise Price multiplied by the number of one one-thousandths of a Preferred
Share for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of such number of Preferred Shares for which a Right
is then exercisable, such number of Class A Common Shares as shall equal the
result obtained by (x) multiplying the then current Exercise Price by the number
of one one-thousandths of a Preferred Share for which a Right was or would have
been exercisable (if the Rights had been exercisable) as of immediately prior to
such Person becoming an Acquiring Person and dividing that product by (y) 50% of
the then current per share market price of the Class A Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person became an Acquiring
Person. In the event that any Person shall become an
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Acquiring Person and the Rights shall then be outstanding, the Company shall not
take any action that would eliminate or diminish the benefits intended to be
afforded by the Rights.
From and after the occurrence of such an event, any Rights
that are or were acquired or beneficially owned by such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) on or after the earlier of (x)
the date of such event and (y) the Distribution Date, shall be null and void and
any holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person whose Rights would be null and void pursuant to the preceding sentence or
any Associate, Affiliate or transferee thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be null and void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be null and void pursuant
to the preceding sentence or any Associate or Affiliate thereof shall be
canceled.
(iii) In the event that the number of Class A Common
Shares which are authorized by the Company's certificate of incorporation and
not outstanding or subscribed for, or reserved or otherwise committed for
issuance for purposes other than upon exercise of the Rights, are not sufficient
to permit the holder of each Right to purchase the number of Class A Common
Shares to which he would be entitled upon the exercise in full of the Rights in
accordance with subparagraph (ii) of paragraph (a) of this Section 11, or should
the Board of Directors so elect, the Company shall: (A) determine the excess of
(1) the value of the Class A Common Shares issuable upon the exercise of a Right
(calculated as provided in the last sentence of
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this subparagraph (iii)) pursuant to Section 11(a)(ii) hereof (the "Current
Value") over (2) the Exercise Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for such Class A
Common Shares, upon payment of the applicable Exercise Price, any one or more of
the following having an aggregate value determined by the Board of Directors to
be equal to the Current Value: (1) cash; (2) a reduction in the Exercise Price;
(3) Preferred Shares or other equity securities of the Company (including,
without limitation, shares, or units or fractions of shares, of preferred stock
which the Board of Directors has determined to have the same value as the Class
A Common Shares (such shares of preferred stock, "common stock equivalents"));
(4) debt securities of the Company; or (5) other assets; 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 an
event triggering the rights to purchase Class A Common Shares described in
Section 11(a)(ii) (the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Exercise Price, Class A Common Shares (to the extent
available) and then, if necessary, cash, which shares and cash have an aggregate
value equal to the Spread. If the Board of Directors shall determine in good
faith that it is likely that sufficient additional Class A Common Shares 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 ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof and the last
paragraph of Section 11(a)(ii) hereof, that such action shall apply
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uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall make a
public announcement, and shall promptly deliver to the Rights Agent a statement,
stating that the exercisability of the Rights has been temporarily suspended. At
such time as the suspension is no longer in effect, the Company shall make
another public announcement, and promptly deliver to the Rights Agent a
statement, so stating. For purposes of this Section 11(a)(iii), the value of the
Class A Common Shares shall be the current per share market price (as determined
pursuant to Section 11(d)(i) hereof) of the Class A Common Shares on the Section
11(a)(ii) Trigger Date and the value of any common stock equivalent shall be
deemed to have the same value as the Class A Common Shares on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, powers and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Exercise Price to be in effect after such record date shall be
adjusted by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the
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aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a reasonably detailed
statement filed with the Rights Agent. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Exercise Price shall be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the
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numerator of which shall be the then current per share market price of the
Preferred Shares on such record date, less the fair market value (as determined
in good faith by the Board of Directors, whose determination shall be described
in a reasonably detailed statement filed with the Rights Agent) of the portion
of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to, but not
including, such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 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 per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
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for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Class A Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by 1000. If neither the
Class A Common Shares nor the Preferred
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Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors, whose determination shall be described in a reasonably
detailed statement filed with the Rights Agent.
(e) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Exercise Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
ten-millionth of a Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
three (3) years from the date of the transaction that requires such adjustment.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, the number of such other shares so receivable upon exercise of
any Right shall thereafter be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Exercise Price hereunder shall evidence
the right to purchase, at the adjusted Exercise Price, the number of one
one-thousandths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
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(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Exercise 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 Exercise Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
ten-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights in substitution
for any adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one millionth) obtained by dividing the Exercise
Price in effect immediately prior to adjustment of the Exercise Price by the
Exercise Price in effect immediately after adjustment of the Exercise Price. The
Company shall make a public announcement (with prompt written notice thereof to
the Rights Agent) of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been distributed, shall be at least ten (10) days later than the date of the
public announcement. If Right Certificates
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have been distributed, 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 to be so distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Exercise Price or the number of one one-thousandths of a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price and the number of
one one-thousandths of a Preferred Share, which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Exercise Price below one one-thousandth of the then par
value of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Exercise Price be made effective as of a record date
for a specified event, the Company may
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elect to defer (with prompt written notice thereof to the Rights Agent) until
the occurrence of such event the issuing to the holder of any Right exercised
after such record date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise 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 Shares, (ii) issuance wholly for cash of any Preferred Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or exchangeable
for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of any rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise other than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such case
(i) the number of
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one one-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the Voting Power of the
number of Common Shares outstanding immediately before such event and the
denominator of which is the Voting Power of the number of Common Shares
outstanding immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjustment. Whenever an adjustment
is made as provided in Sections 11 or 13 hereof, the Company shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief, reasonably
detailed statement of the facts, computations and methodology accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Preferred Shares or the Common Shares a copy of such certificate and (c) if
such adjustment occurs following a Distribution Date, mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained, and shall not be obligated
or responsible for calculating any adjustment, nor shall it be deemed to have a
duty with respect to nor knowledge of such an adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event that, at any time after a Person becomes
an Acquiring Person, directly or indirectly, (a) the Company shall consolidate
with, or merge with and into, any other Person, (b) any
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Person shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other Person (or
the Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries (the date of any such event, a "Section 13 Trigger
Date"), then, and in each such case, proper provision shall be made so that (i)
each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Exercise Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares for which a Right is
then exercisable, such number of Common Shares of such other Person (including
the Company as successor thereto or as the surviving corporation) as shall equal
the result obtained by (A) multiplying the then current Exercise Price by the
number of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such other Person (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; (ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
issuer; and (iv) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number
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of its Common Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company covenants and agrees that it shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. For purposes hereof, the
"earning power" of the Company and its Subsidiaries shall be determined in good
faith by the Company's Board of Directors on the basis of the operating earnings
of each business operated by the Company and its Subsidiaries during the three
(3) fiscal years preceding the date of such determination (or, in the case of
any business not operated by the Company or any Subsidiary during three (3) full
fiscal years preceding such date, during the period such business was operated
by the Company or any Subsidiary).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market
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value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors. 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 Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares. Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and
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preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to each registered holder of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share as the
fraction of one Preferred Share that such holder would otherwise receive upon
the exercise of the aggregate number of Rights exercised by such holder. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Class A Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise multiplied by 1000.
(c) The holder of a Right by the acceptance of the Right
expressly waives any right to receive fractional Rights or fractional shares
upon exercise of a Right except as provided above.
(d) Whenever a payment for fractional Rights or
fractional shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting forth in
reasonable detail the facts related to such payment and the prices and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to, and shall not be deemed to
have knowledge of any payment for fractional Rights or fractional shares under
any Section of this Agreement relating to the payment of fractional Rights or
fractional shares unless and until the Rights Agent shall have received such a
certificate and sufficient monies.
Section 15. Rights of Action. All rights of action in respect
of this Agreement,
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excepting the rights of action given to the Rights Agent under Section 18 or
Section 20 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares) may, without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books maintained by the Rights Agent if
surrendered at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer with a properly
completed form of certification;
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(c) the Company and the Rights Agent may treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything 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, judgment or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, that the Company must use its reasonable best efforts to have
any such order, decree, judgment or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of
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directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
25 hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, legal fees and disbursements incurred in the preparation, delivery,
acceptance, administration, execution and amendment of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent, and its officers, agents and directors for, and to
hold each of them harmless against, any loss, liability, damage, judgment,
ruling (interlocutory or final), fine, penalty, claim, demand, settlement, cost
or expense, incurred without gross negligence, bad faith or willful misconduct
(as finally determined by a court of competent jurisdiction) on the part of the
Rights Agent, for any action taken, suffered or omitted by the Rights Agent or
such indemnified party in connection with the acceptance or administration of
this Agreement or the exercise or performance of its duties hereunder,
including, without limitation, the costs and expenses of defending against any
claim of liability in the premises. The provisions of this Section 18 and
Section 20 below shall survive the exercise or expiration of the Rights, the
termination or expiration of this Agreement, and the resignation or removal of
the Rights Agent. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
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The Rights Agent may conclusively rely upon and shall be
authorized and protected by the Company and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, the
acceptance and administration of this Agreement or the exercise or performance
of its duties hereunder in reliance upon any Right Certificate or certificate
for the Preferred Shares or Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof. The
Rights Agent shall not be deemed to have any duty or notice unless and until the
Company has provided the Rights Agent with actual written notice.
Notwithstanding anything in this Agreement to the contrary, in
no event shall the Rights Agent be liable for special, punitive, incidental,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of the action. Any
liability of the Rights Agent under this Agreement shall be limited to the
amount of fees paid by the Company to the Rights Agent; provided, however, with
respect to liability arising from the bad faith or willful misconduct of the
Rights Agent, the liability of the Rights Agent shall not be so limited.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder
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services business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations expressly imposed by this Agreement upon
the following terms and conditions, and no implied duties or obligations shall
be read into this Agreement against the Rights Agent, by all of
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which the Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from
acting, the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the General Counsel, 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 and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted 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 gross negligence, bad faith or willful misconduct (as finally determined
by a court of competent jurisdiction).
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its
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countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be liable for, nor 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 have any liability for nor
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 have any
liability for, nor be responsible for any adjustment required under Sections 11
or 13 hereof or for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any Preferred Shares will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept advice or instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, any Executive Vice
President, the General Counsel, the Managing Attorney - Corporate and the
Secretary of the
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Company, and to apply to such officers for advice or instructions in connection
with its duties, and such advice or instructions shall be full authorization to
the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted to be taken by it in good faith in
accordance with the advice or instructions of any such officer. The Rights Agent
shall be fully protected and authorized in relying upon the most recent advice
or instructions received by any such officer. Any application by the Rights
Agent for written advice or instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken, suffered
or omitted by the Rights Agent under this Agreement and the date on or after
which such action shall be taken, suffered by or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by,
suffered by or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written advice or instructions in response
to such application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, affiliate,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person.
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(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 or any other Person
resulting from any such act, default, neglect or misconduct.
(j) Except as otherwise provided herein, the Rights
Agent shall not be required 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 that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) The Rights Agent shall not be required to take
notice or be deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in this Agreement or
the designation of any Person as an Acquiring Person, Affiliate or Associate)
under this Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or determination.
(l) 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 properly completed, the Rights Agent shall not take any
further action with respect to such requested exercise or 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 thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and the
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Preferred Shares by registered or certified mail and, at the expense of the
Company, to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
the Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (i) a Person organized and doing business under the laws
of the United States or of any other state of the United States, in good
standing, which is authorized under such laws to conduct shareholder services
business 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 dollars or (ii) a
subsidiary of a Person described in clause (i) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
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appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and the
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the earlier of the Redemption Date and the Close
of Business on the Final Expiration Date, the Company may with respect to Common
Shares so issued or sold pursuant to (i) the exercise of stock options, (ii)
under any employment plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
Section 23. Redemption.
(a) At any time prior to the time any Person becomes an
Acquiring Person, the Board of Directors may, by the Required Board Vote, redeem
all but not less than all of the then outstanding Rights at the Redemption
Price. The redemption of the Rights by the Board of
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Directors may be made effective at such time, on such basis and subject to such
conditions as the Board of Directors in its sole discretion may establish. The
Company may, at its option, pay the Redemption Price in cash, Class A Common
Shares (based on the market price thereof, as determined by the Board of
Directors) or other form of consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the effectiveness of the redemption
of the Rights pursuant to paragraph (a) of this Section 23 or such earlier time
as may be determined by the Board of Directors, by the Required Board Vote, in
the action ordering such redemption (although not earlier than the time of such
action) (such time the "Redemption Date"), and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly notify the Rights Agent in writing of such
redemption and shall give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after such action
of the Board of Directors ordering the redemption of the Rights pursuant to
paragraph (a), the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. If the payment of the Redemption Price is not
included with such notice, each such notice shall 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
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any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, other than in connection with the purchase of Common Shares
prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for Class A Common Shares at an exchange ratio of one Class A Common
Share per Right appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary,
any entity holding Common Shares for or pursuant to the terms of any such plan
or any Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of Common Shares representing a majority of
the Voting Power then outstanding.
(b) Immediately upon the action of the Board of
Directors ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Class A Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange (with prompt
written notice thereof to the Rights Agent); provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of the
exchange. The Company promptly shall mail a notice of the exchange to the Rights
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54
Agent and 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 that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the Class A Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Shares or common stock
equivalents for Class A Common Shares exchangeable for Rights, at the initial
rate of one one-thousandth of a Preferred Share (or an appropriate number of
common stock equivalents) for each Class A Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Class A Common Share shall have the same voting rights
as one Class A Common Share.
(d) In the event that there shall not be sufficient
Class A Common Shares, Preferred Shares or common stock equivalents authorized
by the Company's certificate of incorporation and not outstanding or subscribed
for, or reserved or otherwise committed for issuance for purposes other than
upon exercise of Rights, to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may
be necessary to authorize additional Class A Common Shares, Preferred Shares or
common stock equivalents for issuance upon exchange of the Rights.
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55
(e) The Company shall not be required to issue fractions
of Class A Common Shares or to distribute certificates which evidence fractional
Class A Common Shares. In lieu of such fractional Class A Common Shares, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Class A Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current per share
market value of a whole Class A Common Share. For the purposes of this paragraph
(e), the current per share market value of a whole Class A Common Share shall be
the closing price of a Class A Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall, after the Distribution
Date, propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by
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56
payment of dividends in Common Shares), then, in each such case, the Company
shall give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least ten (10) days prior to the record date for determining holders of
the Preferred Shares for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable thereafter
give to the Rights Agent and to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
ExpressJet Holdings, Inc.
0000 Xxxxx Xxxxxx, Xxxx. XXXXX
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
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57
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sent by registered or
certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing with the Company) as follows:
Mellon Investor Services LLC
Plaza of the Americas
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Relationship Manager
with a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given to Continental shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed as follows:
Continental Airlines, Inc.
0000 Xxxxx Xxxxxx, XXXXX
Xxxxxxx, XX 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may, by
the Required Board Vote, from time to time, and the Rights Agent shall, if the
Company directs, supplement or amend this Agreement without the approval of any
holders of Right Certificates to cure any
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58
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
change to or delete any provision hereof or to adopt any other provisions with
respect to the Rights which the Company may deem necessary or desirable;
provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended or supplemented in any
manner which would adversely affect the interests of the holders of Rights
(other than an Acquiring Person and its Affiliates and Associates).
Notwithstanding anything contained in this Agreement to the contrary, until the
end of the Term (as defined in the Capacity Purchase Agreement), unless at such
time CAL beneficially owns Common Shares representing at least 5% of the Voting
Power of the Common Shares then outstanding, in which case until such time as
CAL ceases to beneficially own Common Shares representing at least 5% of the
Voting Power of the Common Shares then outstanding, no supplement or amendment
to this Agreement shall be made that deletes, amends, eliminates or otherwise
changes clause (v) of the definition of Exempt Person or this sentence or
otherwise has the effect of amending, eliminating or otherwise changing clause
(v) of the definition of Exempt Person or this sentence without the prior
written consent of Continental, which may be withheld in Continental's sole
discretion. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment to this Agreement shall be made which
reduces the Redemption Price, provides for an earlier Final Expiration Date,
alters the provisions of Section 23(a) relating to the redemption of the Rights,
or extends the time during which the Rights may be redeemed if, in any such
case, at the time of such supplement or amendment the Rights are not redeemable.
Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights, duties, liabilities and
obligations of the Rights Agent under this Agreement will be effective against
the Rights Agent without the execution of such supplement or amendment by the
Rights Agent. Upon the delivery of a certificate from an
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59
appropriate officer of the Company, and if requested by the Rights Agent, an
opinion of counsel, 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.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent, the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares), and CAL (with respect to Sections 27
and 35 of this Agreement), 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, the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) and CAL
(with respect to Sections 27 and 35 of this Agreement).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties, obligations and liabilities of the
Rights Agent shall be
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60
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Administration. The Board of Directors, by the
Required Board Vote, shall have the exclusive power and authority to administer
and interpret the provisions of this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors or the Company or as may
be necessary or advisable in the administration of this Agreement. All such
actions, calculations, determinations and interpretations which are done or made
by the Board of Directors in good faith shall be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other Person
and shall not subject the Board of Directors to any liability to the holders of
the Rights. The Rights Agent shall always be entitled to assume that the Board
of Directors acted in good faith and shall incur no liability in reliance
thereof.
Section 35. Additional Agreement. Until the end of the Term
(as defined in the Capacity Purchase Agreement), unless at such time CAL
beneficially owns Common Shares representing at least 5% of the Voting Power of
the Common Shares then outstanding, in which case until such time as CAL ceases
to beneficially own Common Shares representing at least 5% of the Voting Power
of the Common Shares then outstanding, the Company shall not, without the prior
written consent of Continental, which may be withheld in Continental's sole
discretion, take any action to approve, adopt or implement a
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61
rights agreement or any other agreement having a similar effect, whether upon
the expiration or termination of this Agreement or otherwise, unless such rights
agreement or other agreement (i) includes CAL as an Exempt Person (or any term
with a definition under such agreement similar thereto), (ii) exempts CAL from
the definition of Acquiring Person (or any term under such agreement with a
definition similar thereto), (iii) exempts CAL from the restrictions thereof and
(iv) contains a provision providing that no supplement, amendment, change or
alteration to such rights agreement or other agreement shall be made that
deletes, amends, eliminates or otherwise changes the provisions thereof that
implement clauses (i), (ii), (iii) and (iv) of this Section 35 or otherwise has
the effect of amending, eliminating or otherwise changing the provisions thereof
which implement clauses (i), (ii), (iii) and (iv) of this Section 35, without
the prior written consent of Continental, which may be withheld in Continental's
sole discretion. Notwithstanding anything contained in this Agreement to the
contrary, until the end of the Term (as defined in the Capacity Purchase
Agreement), unless at such time CAL beneficially owns Common Shares representing
at least 5% of the Voting Power of the Common Shares then outstanding, in which
case until such time as CAL ceases to beneficially own Common Shares
representing at least 5% of the Voting Power of the Common Shares then
outstanding, this Section 35 shall not be amended without the prior written
consent of Continental, which may be withheld in Continental's sole discretion.
The provisions of this Section 35 shall survive the exercise, exchange,
redemption or expiration of the Rights and the termination or expiration of this
Agreement.
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62
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
EXRESSJET HOLDINGS, INC.
Attest:
By: By:
-------------------------- -----------------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxx
Secretary Chief Executive Officer
MELLON INVESTOR SERVICES LLC,
as Rights Agent
Attest:
By: By:
-------------------------- -----------------------------------------
Name: Name:
--------------------- ---------------------------------
Title: Title:
-------------------- ---------------------------------
CONTINENTAL AIRLINES, INC.
(with respect to Sections 27, 29 and 35)
Attest:
By: By:
-------------------------- -----------------------------------------
Name: Name:
--------------------- ---------------------------------
Title: Title:
-------------------- ---------------------------------
[Signature Page to Rights Agreement]
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63
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
EXPRESSJET HOLDINGS, INC.
-----------------------------------------------
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------------------------------
ExpressJet Holdings, Inc., a Delaware corporation (the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
Delaware General Corporation Law at a meeting duly called and held on
______________, 2001:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Restated
Certificate of Incorporation of the Corporation (the "Restated Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of this series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be ________. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
64
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any other stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount (if any) per share (rounded to the
nearest cent), subject to the provision for adjustment hereinafter set forth,
equal to 1000 times the aggregate per share amount of all cash dividends, and
1000 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
Class A Common Stock, par value $.01 per share (the "Class A Common Stock"), or
Class B Common Stock, par value $.01 per share (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock"), of the Corporation
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of this Section
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and
A-2
65
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of votes entitled to be cast by the holders of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of votes entitled to be cast by the holders of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided in the Restated Certificate
of Incorporation, including any other Certificate of Designation creating a
series of Preferred Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise required by
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A
A-3
66
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; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. The
Corporation shall take all such actions as are necessary to cause all such
shares to become authorized but unissued shares of Preferred Stock that may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein or in the Restated Certificate of
Incorporation, including any 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
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1000 times the aggregate amount to be distributed per share to holders of shares
of Common Stock plus an amount equal to any accrued and unpaid dividends. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1000 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
A-4
67
changed or exchanged. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. Amendment. The Restated Certificate of Incorporation
shall not be amended in any manner, including in a merger or consolidation,
which would alter, change, or repeal the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting together as a single class.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and upon liquidation, dissolution and
winding up, junior to all series of Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its duly authorized officer this ______ day of
_____________, 2001.
EXPRESSJET HOLDINGS, INC.
By: _____________________________
Name:
Title:
X-0
00
XXXXXXX X
Form of Right Certificate
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER ____________, 2011 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT (AS DEFINED
HEREIN). UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT ARE OR
WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID.
Right Certificate
EXPRESSJET HOLDINGS, INC.
This certifies that _______________________ , or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of ______________, 2001 (the "Rights Agreement"),
between ExpressJet Holdings, Inc., a Delaware corporation (the "Company"), and
Mellon Investor Services LLC (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to the earliest of (i) 5:00 P.M., central time, on
__________________, 2011, (ii) the Redemption Date (as such term is defined in
the Rights Agreement), or (iii) the time at which such Rights are exchanged
pursuant to Section 24 of the Rights Agreement, at the principal office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share ("Preferred Shares"), of
the Company, at a purchase price of ____ per one one-thousandth of a Preferred
Share (the "Exercise Price"), upon presentation and surrender of this Right
Certificate with the certification and the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Exercise Price set forth above, are
the number and Exercise Price as of ________________, 2001, based on the
Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Exercise Price and the number of one
69
one-thousandths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if the Rights are or were at any time on or
after the earlier of (x) the date of such event and (y) the Distribution Date
(as such term is defined in the Rights Agreement) acquired or beneficially owned
by an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as
such terms are defined in the Rights Agreement), such Rights shall become void,
and any holder of such Rights shall thereafter have no right to exercise such
Rights.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent and will be mailed to the holder of
the Right Certificates, without charge, after receipt of a written request
therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at the Company's
option, the Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $.001 per Right or (ii) may be exchanged in
whole or in part for shares of the Company's Class A Common stock, par value
$.01 per share, or Preferred Shares.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of
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directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company.
Dated as of _________________________.
EXPRESSJET HOLDINGS, INC.
Attest:
_____________________________ By:__________________________
Name: Name:
Title: Title:
Countersigned:
MELLON INVESTOR SERVICES LLC
Rights Agent
By:_________________________
Authorized Signature
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns and transfers unto___________________________________________
____________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________, ____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
-----------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_________________________________
Signature
-----------------------------------
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72
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: EXPRESSJET HOLDINGS, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
______________________________________________________________
Dated: ________________, _____
_________________________________
Signature
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73
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
---------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_________________________________
Signature
---------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On ________________, 2001, the Board of Directors of ExpressJet
Holdings, Inc. (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Class A Common Stock,
par value $.01 per share (the "Class A Common Shares"), and Class B Common
Stock, par value $.01 per share (the "Class B Common Shares" and, together with
the Class A Common Shares, the "Common Shares"), outstanding on __________ ____,
2001 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Shares"), of the Company, at a price of $_______ per one
one-thousandth of a Preferred Share (the "Exercise Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Mellon Investor
Services LLC, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of Common Shares
representing 15% or more (or, if such person is an Institutional Investor (as
defined herein), 20% or more) of the total number of votes entitled to be cast
by the holders of the Common Shares then outstanding, taking into account the
operation of Article Four or Article Eight of the Company's Restated Certificate
of Incorporation and related provisions of the Company's bylaws ("Voting
Power"), or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person becomes an
Acquiring Person) following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of Common Shares representing
15% or more (or, if such person is an Institutional Investor, 20% or more) of
the Voting Power of the outstanding Common Shares (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this Summary of Rights
attached thereto.
An "Institutional Investor" is defined in the Rights Agreement as a
person who has a Schedule 13G on file with the Securities and Exchange
Commission pursuant to the requirements of Rule 13d-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with respect to its
holdings of the Company's voting securities ("Schedule 13G"), so long as (i)
such person is principally engaged in the business of managing investment funds
for unaffiliated securities investors and, as part of such person's duties as
agent for fully managed accounts, holds or exercises voting or dispositive power
over Common Shares, (ii) such person acquires beneficial ownership of Common
Shares pursuant to trading activities undertaken in the ordinary course of such
person's business and
75
not with the purpose nor the effect, either alone or in concert with any person,
of exercising the power to direct or cause the direction of the management and
policies of the Company or of otherwise changing or influencing the control of
the Company, nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction subject to Rule
13d-3(b) of the Exchange Act and (iii) if such person is a person included in
Rule 13d-1(b)(1)(ii) of the Exchange Act, such person is not obligated to, and
does not, file a Schedule 13D with respect to the securities of the Company.
Under the terms of the Rights Agreement, certain "exempt persons"
are excluded from the definition of Acquiring Person, including: (i) the
Company, (ii) any subsidiary of the Company, (iii) any employee benefit plan of
the Company or any subsidiary of the Company, (iv) any entity holding Common
Shares for or pursuant to the terms of any such employee benefit plan, (v)
Continental Airlines, Inc. ("Continental") and certain of its affiliates
(collectively, "CAL") until the end of the Term (as defined in the Capacity
Purchase Agreement, dated as of January 1, 2001, among the Company, Continental
and ExpressJet Airlines, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company (the "Capacity Purchase Agreement")), unless at such
time CAL beneficially owns Common Shares representing at least 5% of the Voting
Power of the Common Shares then outstanding, in which case until such time as
CAL ceases to beneficially own Common Shares representing at least 5% of the
Voting Power of the Common Shares then outstanding, and (vi) any person who
becomes the beneficial owner of Common Shares representing 15% or more of the
Voting Power of the Company then outstanding as a result of any action by or
transaction with CAL with respect to the Common Shares of which CAL is the
beneficial owner, provided, however, if such person in clause (vi) becomes the
beneficial owner of an additional 1% of the Voting Power of the Company then
outstanding above the "Permitted Percentage," such person shall cease to be an
exempt person. "Permitted Percentage" is defined in the Agreement to mean the
percentage of the Voting Power of the Company such person beneficially owned
immediately following such transaction or such lesser amount of the Voting Power
of the Company such person beneficially owned at any time following such
transaction (not below 14% (or 19% if such person in an Institutional
Investor)).
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date or upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the Close of Business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on ________ ____, 2011 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier redeemed
by the Company, in each case, as described below.
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The Exercise Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to an
aggregate payment of 1000 times the aggregate payment made per Common Share.
Each Preferred Share will have 1000 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
1000 times the amount received per Common Share. The rights are protected by
customary antidilution provisions.
From and after the occurrence of an event described in Section
11(a)(ii) of the Rights Agreement, if Rights are or were at any time on or after
the earlier of (x) the date of such event and (y) the Distribution Date (as such
term is defined in the Rights Agreement) acquired or beneficially owned by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such
terms are defined in the Rights Agreement), such Rights shall become null and
void, and any holder of such Rights shall thereafter have no right to exercise
such Rights.
In the event that, at any time after a person becomes an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person and its
Affiliates and Associates (which will thereafter be null and void), will
thereafter have the right to receive upon exercise that number of Class A Common
Shares having a market value of two times the exercise price of the Right. If
the Company does not have sufficient Class A Common Shares to satisfy such
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obligation to issue Class A Common Shares, or if the Board of Directors so
elects, the Company shall deliver upon payment of the exercise price of a Right
an amount of cash or securities equivalent in value to the Class A Common Shares
issuable upon exercise of a Right; provided that, if the Company fails to meet
such obligation within 30 days following the date a person becomes an Acquiring
Person, the Company must deliver, upon exercise of a Right but without requiring
payment of the exercise price then in effect, Class A Common Shares (to the
extent available) and cash equal in value to the difference between the value of
the Class A Common Shares otherwise issuable upon the exercise of a Right and
the exercise price then in effect. The Board of Directors may extend the 30-day
period described above for up to an additional 60 days to permit the taking of
action that may be necessary to authorize sufficient additional Class A Common
Shares to permit the issuance of Class A Common Shares upon the exercise in full
of the Rights.
At any time after any person becomes an Acquiring Person and prior
to the acquisition by any person or group of Common Shares representing a
majority of the Common Shares then outstanding, the Board of Directors may
exchange the Rights (other than Rights owned by such person or group which have
become null and void), in whole or in part, at an exchange ratio of one Class A
Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Exercise Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any person becomes an Acquiring
Person, the Board of Directors of the Company, by the approval of two-thirds of
the members of the Board of Directors, including the affirmative vote of
two-thirds of the "Continuing Directors" (as defined below) then in office (the
"Required Board Vote"), may redeem the Rights in whole, but not in part, at a
price of $0.001 per Right (the "Redemption Price"). The redemption of the Rights
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. Immediately upon
any redemption of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price. "Continuing Directors" means those directors who were members of the
Board of Directors of the Company at the time the Company entered into the
Rights Agreement and any director who subsequently becomes a member of the Board
of Directors, if such director's nomination for election or appointment to the
Board of Directors is recommended or approved by the majority vote of the
Continuing Directors then in office.
The terms of the Rights may be amended by the Board of Directors of
the Company, by the Required Board Vote, without the consent of the holders of
the Rights, except that until the end of the Term (as defined in the Capacity
Purchase Agreement), unless at such time CAL beneficially owns Common Shares
representing at least 5%
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78
of the Voting Power of the Common Shares then outstanding, in which case until
such time as CAL ceases to beneficially own Common Shares representing at least
5% of the Voting Power of the Common Shares then outstanding, any action to
amend, eliminate or otherwise change clause (v) of the definition of "exempt
person" or to change the definition of Required Board Vote shall require the
affirmative vote of all of the members of the Board of Directors. In addition,
until the end of the Term (as defined in the Capacity Purchase Agreement),
unless at such time CAL beneficially owns Common Shares representing at least 5%
of the Voting Power of the Common Shares then outstanding, in which case until
such time as CAL ceases to beneficially own Common Shares representing at least
5% of the Voting Power of the Common Shares then outstanding, no supplement or
amendment may be made to the Agreement which amends, eliminates or otherwise
changes clause (v) of the definition of "exempt person" or has the same effect
thereto, without the prior written consent of Continental, which may be withheld
in Continental's sole discretion. From and after such time as any person becomes
an Acquiring Person no amendment may adversely affect the interests of the
holders of the Rights (other than the Acquiring Person and its Affiliates and
Associates).
Under the terms of the Agreement, until the end of the Term (as
defined in the Capacity Purchase Agreement), unless at such time CAL
beneficially owns Common Shares representing at least 5% of the Voting Power of
the Common Shares then outstanding, in which case until such time as CAL ceases
to beneficially own Common Shares representing at least 5% of the Voting Power
of the Common Shares then outstanding, the Company is restricted, without the
prior written consent of Continental, which may be withheld in Continental's
sole discretion, from taking any action, whether upon the expiration or
termination of the Agreement or otherwise, to approve, adopt or implement a
rights agreement or any other agreement having a similar effect, whether upon
the expiration or termination of this Agreement or otherwise, unless such
rights agreement or other agreement (i) includes CAL as an Exempt Person (or
any term with a definition under such agreement similar thereto), (ii) exempts
CAL from the definition of Acquiring Person (or any term under such agreement
with a definition similar thereto), (iii) exempts CAL from the restrictions
thereof and (iv) contains a provision providing that no supplement, amendment,
change or alteration to such rights agreement or other agreement shall be made
that deletes, amends, eliminates or otherwise changes the provisions thereof
that implement clauses (i), (ii) and (iii) above and this clause (iv) or
otherwise has the effect of amending, eliminating or otherwise changing the
provisions thereof which implement clauses (i), (ii) and (iii) above and this
clause (iv), without the prior written consent of Continental, which may be
withheld in Continental's sole discretion.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
__________ _____, 2001. A copy of the 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 Agreement, which
is hereby incorporated herein by reference.
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