RIGHTS AGREEMENT
dated as of February 26, 1997
by and between
CITY NATIONAL CORPORATION
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . 5
Section 3. Issuance of Right Certificates . . . . . . . . . . . . . . . 5
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . 7
Section 5. Countersignature and Registration. . . . . . . . . . . . . . 7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Exercise of Rights . . . . . . . . . . . . . . . . . . . . . 8
Section 8. Cancellation and Destruction of Right Certificates . . . . .10
Section 9. Reservation and Availability of Capital Stock. . . . . . . .10
Section 10. Securities Record Date . . . . . . . . . . . . . . . . . . .11
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
Upon Exercise of Rights or Number of Rights . . . . . . . .11
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights . . . . . . . . . . . . . .16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . .17
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . .19
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . .19
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . .20
Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder. . . . . . . . . . . . . . . . . . . . . . . . .20
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . .20
Section 19. Merger or Consolidation or Change of Name of Rights Agent. .21
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Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . .21
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . .23
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . .24
Section 23. Redemption of Rights . . . . . . . . . . . . . . . . . . . .24
Section 24. Exchange of Rights . . . . . . . . . . . . . . . . . . . . .25
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . .25
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . .27
Section 28. Certain Covenants. . . . . . . . . . . . . . . . . . . . . .27
Section 29. Successors . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . .27
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . .28
Section 32. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .28
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . .28
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . .28
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TABLE OF EXHIBITS
Exhibit A -- Form of Right Certificate
TABLE OF DEFINED TERMS
Term Defined Page Section
------------ ---- -------
Adjustment Shares 13 11(a)(ii)
Affiliate 1 1
Agreement 1 Introduction
Associate 1 1
Beneficial Owner 1 1
Beneficially Own 1 1
Business Day 2 1
Close of Business 3 1
Closing Price 3 1
Common Share 1 1
Common Share Equivalent 3 11(a)(iii)
Company (City National Corporation) 1 Introduction
Company (following a Section 13(a) Event) 18 13(a)(iii)
Current Market Price 3 1
Distribution Date 4 3(a)
Exchange Act 4 1
Exchange Ratio 25 24(a)
Exempt Person 4 1
Exercise Price 4 7(c)
Expiration Date 4 1
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TABLE OF DEFINED TERMS
(continued)
Term Defined Page Section
------------ ---- -------
10% Ownership Date 4 1
10% Stockholder 4 1
NASDAQ 3 1
Person 5 1
Preferred Share 5 1
Preferred Share Equivalent 5 11(b)
Record Date 5 Recital
Redemption Date 5 1
Redemption Price 5 23(a)
Right 1 Recital
Right Certificate 5 1
Rights Expiration Date 5 Introduction
Rights Agent 1 Introduction
Section 11(a)(ii) Event 5 11(a)(ii)
Section 13(a) Event 5 13(a)
Securities Act 5 1
Subsidiary 5 1
Surviving Person 17 13(a)
Trading Day 5 1
Unavailable Adjustment Shares 13 11(a)(iii)
Unavailable Exchange Shares 26 24(c)
Voting Share 5 1
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RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is made and entered into as of
the 26th day of February, 1997 by and between CITY NATIONAL CORPORATION, a
Delaware corporation (the "Company"), and CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, a New York corporation (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding on
March 13, 1997 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Preferred Share (as hereinafter defined),
upon the terms and subject to the conditions set forth herein, and has
further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date or the Expiration
Date (as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as
in effect on the date hereof.
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, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the
Exchange Act, in each case as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition or otherwise)
pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights (other than these Rights),
rights, warrants or options, or otherwise, PROVIDED, HOWEVER, that a
Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, securities tendered pursuant to a tender offer or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange;
(iii) which such Person or any such Person's Affiliates or
Associates has the right to vote, whether alone or in concert with
others, pursuant to any agreement, arrangement or understanding,
PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security
(A) arises solely from a revocable proxy given to such Person or any
of such Person's Affiliates or Associates in response to a public proxy
solicitation made pursuant to and in accordance with the applicable
rules and regulations promulgated under the Exchange Act, and (B) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(iv) which are Beneficially Owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting (other than voting pursuant
to a revocable proxy as described in the proviso to clause (iii) of this
definition of "Beneficial Owner") or disposing of any securities of the
Company; and
(v) which, on any day on or after the Distribution Date,
evidence Rights that prior to such date were represented by certificates
for Common Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section l(b), a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the States of New York are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business
Day, it shall mean 5:00 p.m., New York time, on the next succeeding Business
Day.
"Closing Price" of a stock or other security on any day shall be the
last sale price, regular way, per share of such stock or unit of such other
security on such day 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 such stock or other 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 such stock or other
security is listed or admitted to trading or, if such stock or other 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 such
stock or other security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker that makes a market in such stock or other security and that is
selected by the Board of Directors of the Company.
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"Common Share" shall mean one share of the Common Stock, par value
$1.00 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of each class of
stock of such Person having the right to vote generally in the election of
directors or, if such Person is a Subsidiary of another Person, one Common
Share of the Person that ultimately controls such Person.
"Common Share Equivalent" shall have the meaning ascribed to it in
Section 11(a)(iii) hereof.
"Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of
such stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question;
PROVIDED, HOWEVER, that if any event shall have caused the Closing Price on
any Trading Day during such 30-day period not to be fully comparable with the
Closing Price on the date in question (or, if no Closing Price is available
on the date in question, on the Trading Day immediately preceding the date in
question), then each such non-comparable Closing Price so used shall be
appropriately adjusted by the Board of Directors in order to make the Closing
Price on each Trading Day during the period used for the determination of the
Current Market Price fully comparable with the Closing Price on such date in
question (or, if applicable, the immediately preceding Trading Day).
"Current Market Price" per share of any stock or unit of such other security
that is not publicly held or so listed or traded, and "Current Market Price"
of any other property, shall mean the fair value per share of such stock or
unit of such other security, or the fair value of such other property,
respectively, as determined in good faith by the Board of Directors of the
Company based upon such appraisals or valuation reports of such independent
experts as the Board of Directors shall in good faith determine appropriate,
which determination shall be described in a statement filed by the Company
with the Rights Agent.
"Distribution Date" shall have the meaning ascribed to it in Section 3
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exempt Person" shall mean the Company, any wholly-owned Subsidiary of
the Company, any employee benefit plan of the Company or of a Subsidiary of
the Company, and any Person holding Voting Shares for or pursuant to the
terms of any such employee benefit plan.
"Exercise Price" shall have the meaning ascribed to it in Section 7(c)
hereof.
"Expiration Date" shall mean March 13, 2007.
"10% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or
a 10% Stockholder containing the facts by virtue of which a Person has become
a 10% Stockholder.
"10% Stockholder" shall mean any Person that Beneficially Owns 10% or
more of the Voting Shares of the Company then outstanding; PROVIDED, HOWEVER,
that the term "10% Stockholder" shall not include: (i) an Exempt Person; (ii)
any Person that would not
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otherwise be a 10% Stockholder but for a reduction in the number of
outstanding Voting Shares resulting from a stock repurchase program or other
similar plan of the Company or from a self tender offer of the Company, which
plan or tender offer commenced on or after the date hereof; PROVIDED,
HOWEVER, that the term "10% Stockholder" shall include such Person from and
after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company
equal to 1% or more of the Voting Shares of the Company then outstanding and
(B) such Person, together with all Affiliates and Associates of such Person,
shall Beneficially Own 10% or more of the Voting Shares of the Company then
outstanding; (iii) any Person that would not otherwise be a 10% Stockholder
but for its Beneficial Ownership of Rights or (iv) any Person that is the
Beneficial Owner of 10% or more of the outstanding Common Shares as of
February 26, 1997 unless or until such person shall acquire, without the
prior approval of the Board of Directors, Beneficial Ownership of additional
Common Shares and, following such acquisition, is the Beneficial Owner of
more than 24.9% of the Voting Shares of the Company then outstanding. No
Person shall be deemed to be a 10% Stockholder by reason of clause (iv) of
the preceding sentence solely because of an acquisition of Beneficial
Ownership of Common Shares: (i) by gift; (ii) as the result of the death of a
Person, pursuant to a will or the laws of descent, or as the result of the
provisions of any trust or partnership agreement; or (iii) upon the exercise
of any stock option granted by the Company to an employee, officer or
director. In calculating the percentage of the outstanding Voting Shares
that are Beneficially Owned by a Person for purposes of this definition,
Voting Shares that are Beneficially Owned by such Person shall be deemed
outstanding, and Voting Shares that are not Beneficially Owned by such Person
and that are subject to issuance upon the exercise or conversion of
outstanding conversion rights, exchange rights, rights, warrants or options
shall not be deemed outstanding. Any determination made by the Board of
Directors of the Company as to whether any Person is or is not a 10%
Stockholder shall be conclusive and binding upon all holders of Rights.
"Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company, which shall have the rights and preferences set forth in the form of
Certificate of Designations attached to the Agreement.
"Preferred Share Equivalent" shall have the meaning ascribed to it in
Section 11(b) hereof.
"Record Date" shall have the meaning ascribed to it in the recitals
hereto.
"Redemption Date" shall mean the date of the action of the Board of
Directors of the Company authorizing and directing the redemption of the
Rights pursuant to Section 23(a) hereof or the exchange of the Rights
pursuant to Section 24(a) hereof.
"Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.
4
"Right Certificate", as that term is used with respect to any period
prior to the Distribution Date, shall have the meaning ascribed to it in
Section 3(b) hereof, and, as that term is used with respect to any period on
or after the Distribution Date, shall have the meaning ascribed to it in
Section 3(c) hereof.
"Rights Expiration Date" shall mean the Expiration Date, except if
there has been a Distribution Date, then it shall mean the tenth anniversary
of the Distribution Date.
"Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
"Section 13(a) Event" shall have the meaning ascribed to it in Section
13(a) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" of any Person shall mean any corporation or other Person
of which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
"Trading Day" shall mean, as to any stock or other security, a day on
which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
"Voting Share" shall mean (i) a Common Share of the Company and (ii)
any other share of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of
the Company's assets, liquidation, dissolution or winding up. References in
this Agreement to a percentage or portion of the outstanding Voting Shares
shall be deemed a reference to the percentage or portion of the total votes
entitled to be cast by the holders of the outstanding Voting Shares.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as
shall be designated by the Board of Directors of the Company) following the
date of the commencement of, or the first public announcement of the intent
of any Person, other than an Exempt Person, to commence a tender offer or
exchange offer, the consummation of which would cause any Person to become a
10% Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii)
the date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be
represented by certificates for Common Shares (all of which certificates for
Common Shares shall be deemed to be Right Certificates) and not by separate
Right Certificates, (ii) the record holder of the Common Shares
5
represented by each of such certificates shall be the record holder of the
Rights represented thereby and (iii) the Rights shall be transferable only in
connection with the transfer of Common Shares. Until the earliest of the
Distribution Date, the Redemption Date or the Expiration Date, the surrender
for transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close
of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate substantially in the form of
EXHIBIT A hereto representing one Right for each Common Share so held. From
and after the Distribution Date, the Rights shall be represented solely by
such Right Certificates and may only be transferred by the transfer of such
Right Certificates, and the holders of such Right Certificates, as listed in
the records of the Company or any transfer agent or registrar for such
Rights, shall be the record holders of such Rights.
(d) Certificates for Common Shares issued at any time after the
Record Date and prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of
February 26, 1997 by and between City National Corporation and
Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agreement"), as amended to date, the terms and conditions
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of City
National Corporation. Under certain circumstances specified in
the Rights Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this
certificate. Under certain circumstances specified in the Rights
Agreement, Rights beneficially owned by certain persons may become
null and void. City National Corporation will mail to the record
holder of this certificate a copy of the Rights Agreement without
charge promptly following receipt of a written request therefor.
As described in the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
(e) Certificates for Common Shares issued at any time on or after
the Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant to
the terms of a Rights Agreement dated as of February 26, 1997 by
and between the Corporation and Continental Stock Transfer & Trust
Company, as Rights Agent.
(f) In the event that at any time on or after the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event and prior to the earlier of the Redemption Date or the Expiration
Date, the Company shall issue any Common Shares pursuant
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to the exercise of conversion rights, exchange rights, rights (other than
Rights), warrants or options that shall have been issued or granted prior to
the earlier of the date of the first Section 11(a)(ii) Event or the date of
the first Section 13(a) Event, then, unless the Board of Directors of the
Company shall have provided otherwise at the time of the issuance or grant of
such conversion rights, exchange rights, rights (other than Rights), warrants
or options, the Rights Agent shall, as soon as practicable after the date of
such event, send by first-class, postage-prepaid mail to the record holder of
such Common Shares, at the address of such holder as shown on the records of
the Company, a Right Certificate substantially in the form of EXHIBIT A
hereto representing one Right for each Common Share so issued.
(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 10% Stockholder or
any of its Affiliates or Associates or to any Person if the Rights held by
such Person are Beneficially Owned by a 10% Stockholder or any of its
Affiliates or Associates. Any determination made by the Board of Directors
of the Company as to whether any Common Shares are or were Beneficially Owned
at any time by a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder shall be conclusive and binding upon all holders of Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates and
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and
if issued, shall be substantially the same as EXHIBIT A hereto, and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange upon
which the Rights or the securities of the Company issuable upon exercise of
the Rights may from time to time be listed, or to conform to usage. Subject
to Section 22 hereof, Right Certificates, whenever issued, that are issued in
respect of Common Shares that were issued and outstanding as of the Close of
Business on the Distribution Date, shall be dated as of the Distribution Date.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or any Vice President, either manually or by facsimile signature,
and may have affixed thereto the Company's seal or a facsimile thereof
attested by its Secretary or any Assistant Secretary, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates may nevertheless 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. Any Right Certificate may be signed on
behalf of the Company by any person who at the actual date of such execution
shall be a proper officer of the Company to sign such Right Certificate, even
though such person was not such an officer at the date of the execution of
this Agreement.
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(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of Right Certificates, the number of
Rights represented on its face by each Right Certificate and the date of each
Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and so long
as the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split-up, combined or exchanged for one or
more Right Certificates representing the same aggregate number of Rights as
the Right Certificates surrendered. Any registered holder desiring to
transfer, split up, combine or exchange one or more Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto one or more Right
Certificates, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of such Right Certificate if mutilated, the Company shall issue
and deliver to the Rights Agent for delivery to the record holder of such
Right Certificate a new Right Certificate of like tenor in lieu of such lost,
stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any
Person if such Right Certificate represents, or would represent when held by
such Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions
of this Agreement, at any time after the Close of Business on the
Distribution Date and prior to the Close of Business on the earlier of the
Redemption Date or the Rights Expiration Date, the registered holder of any
Right Certificate may exercise the Rights represented thereby in whole or in
part upon surrender of such Right Certificate, with the form of election to
purchase, including certificate, on the reverse side thereof completed and
duly executed, with signature guaranteed,
8
to the Rights Agent at the office of the Rights Agent at 0 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, together with payment of the Exercise Price
for each Right exercised. Upon the exercise of an exercisable Right and
payment of the Exercise Price in accordance with the provisions of this
Agreement, the holder of such Right shall be entitled to receive, subject to
adjustment as provided herein, one one-hundredth of a Preferred Share (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, Common Shares and/or other securities).
(c) The "Exercise Price" for the exercise of each Right shall
initially be $90.00 and shall be payable in lawful money of the United States
of America in accordance with Section 7(f) hereof. The Exercise Price and
the number of Preferred Shares (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares and/or other
securities) to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 7(e), 11 and 13 hereof
and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary,
from and after the earlier of the date of the first Section 11(a)(ii) Event
or the date of the first Section 13(a) Event, any Rights that are or were
Beneficially Owned by a 10% Stockholder or any Affiliate or Associate of a
10% Stockholder at any time on or after the Distribution Date shall be null
and void, and for all purposes of this Agreement such Rights shall thereafter
be deemed not to be outstanding, and any holder of such Rights (whether or
not such holder is a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder) shall thereafter have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of
the Company shall have determined that such action adequately protects the
interests of the holders of Rights, the Company may, in its discretion,
substitute for all or any portion of the Preferred Shares that would
otherwise be issuable (after the Close of Business on the Distribution Date)
upon the exercise of each Right and payment of the Exercise Price (i) cash,
(ii) other equity securities of the Company, (iii) debt securities of the
Company, (iv) other property or (v) any combination of the foregoing, in each
case having an aggregate Current Market Price equal to the aggregate Current
Market Price of the Preferred Shares for which substitution is made. Subject
to Section 7(d) hereof, in the event that the Company takes any action
pursuant to this Section 7(e), such action shall apply uniformly to all
outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate,
completed and duly executed, with signature guaranteed, accompanied by
payment of the Exercise Price for each Right to be exercised and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified check
or cashier's check payable to the order of the Company, the Rights Agent
shall thereupon promptly (i) requisition from the transfer agent of the
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event
or a Section 13(a) Event, Common Shares and/or securities) certificates for
the number of Preferred Shares (or such other securities) to be purchased,
and the Company hereby irrevocably authorizes such transfer agent to comply
with all such requests, and/or, as provided in Section 14 hereof, requisition
from the depositary agent described therein depositary receipts representing
such number of one-hundredths of a Preferred Share (or such other securities)
as are to be
9
purchased (in which case certificates for the Preferred Shares (or such other
securities) represented by such receipts shall be deposited by the transfer
agent with such depositary agent) and the Company hereby directs such
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional Preferred Shares (or such other securities) in
accordance with Section 14 hereof, (iii) after receipt of such certificates,
depositary receipts or cash, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify under the
Securities Act and any applicable securities law of any jurisdiction the
Preferred Shares to be issued pursuant to the exercise of the Rights;
PROVIDED, HOWEVER, that nothing contained in this Section 7 shall relieve the
Company of its obligations under Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to such holder's duly authorized assigns, subject
to the provisions of Section 14 hereof.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to Sections 7(e) and 9(f) hereof, the Company shall
cause to be reserved and kept available out of its authorized and unissued
equity securities (or out of its authorized and issued equity securities held
in its treasury), the number of such equity securities that will from time to
time be sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use
its best efforts, from and after such time as the Rights become exercisable,
to cause all such securities issued or reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
10
(c) If necessary to permit the issuance of securities upon exercise
of the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register and qualify such securities under the
Securities Act, the Exchange Act and any other applicable securities laws and
to keep such registration effective until the earlier of the Redemption Date
or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such securities (subject to
payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered
for exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
(f) With respect to the Common Shares and/or other securities
issuable pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing
covenants shall be applicable only upon and following the occurrence of a
Section 11(a)(ii) Event.
Section 10. SECURITIES RECORD DATE. Each Person in whose name any
certificate for securities of the Company is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of the securities represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate representing such Rights was
duly surrendered and payment of the Exercise Price (and any applicable
transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the securities transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the securities transfer books of the Company
are open.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE
UPON EXERCISE OF RIGHTS OR NUMBER OF RIGHTS. The Exercise Price, the number
and kind of securities that may be purchased upon exercise of a Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
Close of Business on the Record Date and prior to the Close of Business
on the earlier of the Redemption Date or the Expiration Date (A) declare
or pay any dividend on the Preferred Shares payable in Preferred Shares
or Voting Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue Preferred Shares or other securities of the
Company (other than those
11
for which an adjustment is required under Section 11(b) hereof)
in a reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation) or in a reorganization of the Company, then, and upon each
such event, the number and kind of Preferred Shares or other securities
issuable upon the exercise of a Right on the date of such event shall be
proportionately adjusted so that the holder of any Right exercised on or
after such date shall be entitled to receive, upon the exercise thereof
and payment of the Exercise Price, the aggregate number and kind of
Preferred Shares or other securities or other property, as the case may
be, that, if such Right had been exercised immediately prior to such date
and at a time when such Right was exercisable and the transfer books of
the Company were open, such holder would have owned upon such exercise
and would have been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event that a 10% Ownership Date shall have occurred
and neither the Redemption Date nor the Expiration Date shall have
occurred prior to the tenth Business Day following such 10% Ownership
Date (a "Section 11(a)(ii) Event"), then, and upon each such
Section 11(a)(ii) Event, proper provision shall be made so that, except
as provided in Section 7(d) hereof, each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then
current Exercise Price, such number of Common Shares of the Company as
shall equal the result obtained by (A) multiplying the then current
Exercise Price by the then number of one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such
Section 11(a)(ii) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 11(a)(ii) Event, the number of
one-hundredths of a Preferred Share for which a Right would have been
exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 11(a)(ii) Event), and
(B) dividing that product by 50% of the Current Market Price of a Common
Share on the date of occurrence of the relevant Section 11(a)(ii) Event
(such number of shares being hereinafter referred to as the "Adjustment
Shares"). Successive adjustments shall be made pursuant to this
paragraph each time a Section 11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event
the aggregate number of Common Shares that are authorized by the
Company's Certificate of Incorporation, as amended from time to time, but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is less than the aggregate number of Adjustment
Shares thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price (A) cash, (B) other equity securities of the Company
(including, without
12
limitation, shares of preferred stock of the Company or units of
such shares having the same Current Market Price as one
Common Share (a "Common Share Equivalent")), (C) debt securities of the
Company, (D) other property or (E) any combination of the foregoing, in
each case having an aggregate Current Market Price equal to the aggregate
Current Market Price of the Unavailable Adjustment Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that
the Company takes any action pursuant to this Section 11(a)(iii), such
action shall apply uniformly to all outstanding Rights.
(b) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date, fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them initially to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("Preferred Share Equivalents")) or securities convertible
into Preferred Shares or Preferred Share Equivalents, at a price per
Preferred Share or Preferred Share Equivalent (or having a conversion price
per share, if a security convertible into Preferred Shares or Preferred Share
Equivalents) less than the Current Market Price per Preferred Share on such
record date, then, and upon each such event, 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
numerator of which shall be equal to the sum of the number of Preferred
Shares outstanding on such record date plus the number of Preferred Shares
that the aggregate offering price of the total number of Preferred Shares
and/or Preferred Share Equivalents to be so offered (and/or the aggregate
initial conversion price of the convertible securities to be so offered)
would purchase at such Current Market Price, and the denominator of which
shall be equal to the number of Preferred Shares outstanding on such record
date plus the number of additional Preferred Shares and/or Preferred Share
Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); PROVIDED,
HOWEVER, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of
a specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment
shall be made as if the record date for the issuance of such rights, options
or warrants had been the business day immediately preceding the date upon
which such rights, options or warrants became exercisable. 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 to the
Exercise Price shall be made successively whenever such a record date is
fixed, and in the event that such rights or warrants are not so issued, the
Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date, 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 surviving corporation) of assets (other
than a distribution for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the
Exercise Price to be in effect after such record date shall be determined by
multiplying
13
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be
equal to such Current Market Price per Preferred Share. Such adjustments
shall be made successively whenever such a record date is fixed, and in the
event that such a distribution is not so made, the Exercise Price shall be
adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(d) For the purpose of any computation under this Section 11, if
the Preferred Shares are not publicly held or traded, the "Current Market
Price" per Preferred Share shall be conclusively deemed to be the Current
Market Price per Common Share multiplied by 100.
(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
then current Exercise Price; PROVIDED, HOWEVER, that any adjustments that by
reason of this Section 11(e) are not required to be made shall be cumulated
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-thousandth of a Common Share or other share or one-millionth of a
Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right shall, upon exercise thereof, be entitled to
receive any securities of the Company other than Preferred Shares, and if an
event occurs in respect of such securities that, if it were to occur in
respect of Preferred Shares, would require an adjustment under this Section
11 in respect of Preferred Shares, then the number of such other securities
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Preferred Shares contained in this Section 11,
and the other provisions of this Agreement with respect to Preferred Shares
shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) below, upon each adjustment of the Exercise Price
as a result of the calculations made in Sections 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter represent the right to purchase, at the adjusted Exercise Price,
that number of one-hundredths of a Preferred Share (calculated to the nearest
one-millionth of a Preferred Share) obtained by multiplying (i) the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to such adjustment of the Exercise Price by (ii) the
Exercise Price in effect immediately prior to such adjustment, and dividing
the product so obtained by the Exercise Price in effect immediately after
such adjustment.
(i) The Company may elect, on or after the date of any adjustment
of the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of
14
Preferred Shares purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one one-thousandth of a Right)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be
the date on which the Exercise Price is adjusted or any day thereafter, but,
if separate Right Certificates have been issued, it shall be at least 10 days
after the date of such public announcement. If separate Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record date
Right Certificates representing, 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, 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 such adjustment, and upon surrender thereof
if required by the Company, new Right Certificates representing 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 may bear, at the option of the
Company, the adjusted Exercise Price) and shall be registered in the names of
the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one-hundredths of a Preferred Share issuable upon the
exercise of one Right, the Right Certificates theretofore and thereafter
issued may continue to express the Exercise Price per one one-hundredth of a
Preferred Share and the number of Preferred Shares issuable upon the exercise
of one Right that 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-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the advice or opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-hundredths of a Preferred Share 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 elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record
date of the number of one-hundredths of a Preferred Share and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the number of one-hundredths of a Preferred Share 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
15
other appropriate instrument representing 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 further adjustments in the number
of one-hundredths of a Preferred Share that may be purchased upon exercise of
one Right, and such further adjustments in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that the Company 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 thereof, (iii) issuance wholly for cash of Preferred Shares or
securities that by their terms are convertible into or exchangeable for
Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of rights, options or warrants referred to in Section
11(b) hereof, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earliest of the date of the first Section 11(a)(ii) Event, the date of
the first Section 13(a) Event, the Redemption Date or the Expiration Date,
(i) pay any dividend on the Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, (iii) combine the outstanding Common
Shares into a smaller number of Common Shares or (iv) issue Common Shares in
a reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common
Shares outstanding immediately prior to such event and the denominator of
which shall be equal to the number of Common Shares outstanding immediately
after such event. Successive adjustments shall be made pursuant to this
Section 11(n) each time such a dividend is paid or such a subdivision,
combination or reclassification is effected. If an event occurs that would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES ISSUABLE UPON EXERCISE OF RIGHTS. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy
of such certificate and (c) mail a brief summary thereof to each holder of
Rights in accordance with Section 25 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or to give
such notice shall not affect the validity or the force and effect of such
adjustment. Any adjustment to be made pursuant to Sections 11 or 13 hereof
shall be effective as of the date of the event giving rise to such adjustment.
16
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 10% Ownership Date and prior to the earlier of the Redemption Date
or the Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company
shall not be the continuing or surviving corporation in such consolidation or
merger, (2) any Person shall, directly or indirectly, consolidate with or
merge with and into the Company and the Company shall be the continuing or
surviving corporation in 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 Person or cash or any other property, or (3) the
Company and/or any one or more of its Subsidiaries shall, directly or
indirectly, sell or otherwise transfer, in one or more transactions (other
than transactions in the ordinary course of business), assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons other than
the Company or one or more of its wholly-owned Subsidiaries (such Persons,
together with the Persons described in clauses (1) and (2) above shall be
collectively referred to in this Section as the "Surviving Person"), then,
and in each such case, proper provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of the
then current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of validly
authorized and issued, fully paid and nonassessable Common Shares of the
Surviving Person (and if such Surviving Person has more than one class or
series of Common Shares, such number of validly authorized and issued,
fully paid and nonassessable Common Shares of each series or class) as
shall be equal to a fraction, the numerator of which is the product of
the then current Exercise Price multiplied by the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to the first Section (a) Event (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 13(a) Event, the number of one-hundredths of a Preferred Share
that would have been so purchasable if the Distribution Date had occurred
on the Business Day immediately preceding the date of such Section 13(a)
Event, or, if a Section 11(a)(ii) Event has occurred prior to such
Section 13(a) Event, the product of the number of one-hundredths of a
Preferred Share purchasable upon the exercise of a Right (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a Preferred
Share that would have been so purchasable if the Distribution Date had
occurred on the Business Day immediately preceding the date of such
Section 11(a)(ii) Event) immediately prior to such Section 11(a)(ii)
Event, multiplied by the Exercise Price in effect immediately prior to
such Section 11(a)(ii) Event), and the denominator of which is 50% of the
Current Market Price per Common Share of the Surviving Person on the date
of consummation of such Section 13(a) Event;
(ii) the Surviving Person 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;
17
(iii) the term "Company" shall thereafter be deemed to refer to
the Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof
shall thereafter be applicable to its Common Shares thereafter
deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is
the sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole), but less than 100% thereof, then each
Person acquiring all or a portion thereof shall assume the obligations of the
Company as to a fraction of each of the Rights equal to the fraction of the
assets of the Company and its Subsidiaries (taken as a whole) acquired by
such Person, and the obligations of the Company as to the remaining fraction
of each of the Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of
such Surviving Person upon exercise of outstanding Rights have been waived
and that such Section 13(a) Event shall not result in a default by such
Surviving Person under this Agreement, and further providing that, as soon as
practicable after the date of consummation of such Section 13(a) Event, such
Surviving Person shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under
the Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised
pursuant to Section 11 hereof prior to the date
18
of a Section 13(a) Event, such Rights shall thereafter be exercisable only in
the manner described in Section 13(a) hereof. In the event that a Section
11(a)(ii) Event occurs on or after the date of a Section 13(a) Event, Rights
shall not be exercisable pursuant to Section 11 hereof but shall instead be
exercisable pursuant to, and only pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a
Section 13(a) Event.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with respect to
which such fractional Rights would otherwise be issuable, at the time such
fractional Rights would otherwise have been issued as provided herein, an
amount in cash equal to the same fraction of the Current Market Price of a
whole Right on the Business Day immediately prior to the date upon which such
fractional Rights would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples
of one one-hundredth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth
of a Preferred Share). Fractions of Preferred Shares in integral multiples
of one one-hundredth of a Preferred Share may, at the election of the
Company, be represented by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts
shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of Preferred Shares. If the Company shall
determine not to issue fractional Common Shares or Preferred Shares (or
depositary receipts in lieu of Preferred Shares), the Company shall pay to
the registered holders of Right Certificates with respect to which such
fractional Common Shares or Preferred Shares would otherwise be issuable, at
the time such Rights are exercised as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Common
Share or Preferred Share, as the case may be. For purposes of this Section
14(b), the Current Market Price of a whole Common Share or Preferred Share
shall be the Closing Price per share for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional Common Shares or Preferred Shares upon exercise of such Right,
except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates and certificates for Common Shares representing Rights,
and any registered holder of any Right Certificate or of such certificate for
Common Shares, without the consent of the Rights Agent or of the holder of
any other Right
19
Certificate or any other certificate for Common Shares may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under 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 every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented
by certificates for Common Shares registered in the name of the holders of
such Common Shares (which certificates for Common Shares shall also
constitute Right Certificates), and each such Right shall be transferable
only in connection with the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only
be transferable on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations
of ownership or writing on the Right Certificate by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder
of the securities of the Company that may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right or Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, to give or withhold
consent to any corporate action, 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, in each case until
such Right or the Rights represented by such Right Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent as compensation
for all services rendered by it hereunder reasonable and customary fees and
expenses. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for
20
anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice
of its counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. If, 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 if 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 such Right Certificate and in this Agreement.
(b) If 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 if 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 such Right Certificate and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance of the Rights, shall be bound:
(a) 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
21
and protection to the Rights Agent as to any action taken 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 or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the Vice Chairman of the Board, the President, any Vice President,
the Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement, or in the
Right Certificates (except its countersignature thereof), or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including any
Rights becoming null and void pursuant to Section 7(d) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 7, 11, 13 and 23 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by
Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares or other securities to be issued pursuant
to this Agreement or any Right Certificate, or as to whether any Preferred
Shares or Common Shares or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in
22
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30-days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and Preferred Shares by registered
or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30-days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting as such, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such notice,
submit such holder's Right Certificate for inspection by the Company), then
the Company shall become the Rights Agent and the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the States of
New York or California (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
States of New York or California), in good standing, having a principal
office in New York or California, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. 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 of
this Agreement and so that the successor Rights Agent may appropriately act
as Rights Agent hereunder. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing
23
with the predecessor Rights Agent and each transfer agent of the Common
Shares and Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Riht 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 Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in
such form as may be approved by the Board of Directors in order 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 upon exercise of
the Rights in accordance with the provisions of this Agreement.
Section 23. REDEMPTION OF RIGHTS.
(a) Until the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors of the Company may, at its option,
authorize and direct the redemption of all, but not less than all, of the
then outstanding Rights at a redemption price of $.001 per Right, as such
redemption price shall be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
"Redemption Price"), and the Company shall so redeem the Rights.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Within ten (10)
Business Days after the date of such action, the Company shall give notice of
such redemption to the holders of Rights by mailing such notice to all
holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice that
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives such notice, but neither the failure to give any such
notice nor any defect therein shall affect the legality or validity of such
redemption. Each such notice of redemption 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, directly or indirectly, redeem,
acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, or in
connection with the purchase of Common Shares prior to the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in
cash, Common Shares, Preferred Shares, other equity securities of the
Company, debt securities of the Company, other property or any combination of
the foregoing, in each case having an aggregate Current Market Price on the
Redemption Date equal to the Redemption Price.
24
Section 24. EXCHANGE OF RIGHTS.
(a) At any time during the period of 180 days after a Section
11(a)(ii) Event, the Board of Directors of the Company may, at its option,
authorize and direct the exchange of all, but not less than all, of the then
outstanding Rights for Common Shares, one one-hundredths of Preferred Shares,
debt securities of the Company, other property, or any combination of the
foregoing, in each case having an aggregate Current Market Price equal to the
result obtained by (i) multiplying the Current Market Price per Common Share
on the record date for such exchange by the number of Common Shares for which
a Right is exercisable on such record date or (ii) subtracting from such
product the Exercise Price on such Record Date (the "Exchange Ratio"), and
the Company shall so exchange the Rights.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive a number of Common Shares in accordance
with the Exchange Ratio. Within ten (10) Business Days after the date of
such action, the Company shall give notice of such exchange to the holders of
Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect
therein shall affect the legality or validity of such exchange. Each such
notice of exchange shall state the method by which the Rights will be
exchanged for Common Shares.
(c) Notwithstanding the foregoing, in the event that the aggregate
number of Common Shares that are authorized by the Company's Certificate of
Incorporation, as amended from time to time, but not outstanding or reserved
for issuance for purposes other than upon exercise or exchange of the Rights
is less than the aggregate number of Common Shares issuable upon the exchange
of the Rights in accordance with this Section 24 (the excess of such number
of authorized Common Shares over and above such number of issuable Common
Shares being hereinafter referred to as the "Unavailable Exchange Shares"),
then the Company shall substitute for the pro rata portion of the Unavailable
Exchange Shares that would otherwise be issuable upon the exchange of the
Rights in accordance with this Section 24 (i) cash, (ii) other equity
securities of the Company (including, without limitation, Common Share
Equivalents), (iii) debt securities of the Company, (iv) other property or
(v) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
Unavailable Exchange Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action pursuant
to this Section 24, such action shall apply uniformly to all outstanding
Rights.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare or
pay any dividend on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Common Shares or Preferred
25
Shares options, rights or warrants to subscribe for or to purchase any
additional shares thereof or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares or Preferred Shares (other than a reclassification involving
only the subdivision of outstanding shares), (iv) to effect any consolidation
or merger with or into, 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 more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then and in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action that shall specify the record date for the purpose of such
dividend or distribution, or the date upon which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up
is to take place and the date of participation therein by the holders of
record of the Common Shares 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 20 days prior to the record date for
determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares or Preferred
Shares, whichever date shall be the earlier. The failure to give the notice
required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, specifying the event and the
consequences of the event to holders of Rights under Sections 11 and 13
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:
City National Corporation
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) to the
principal office of the Rights Agent as follows:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Compliance Department
26
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.
(a) The Board of Directors of the Company may, from time to time,
without the approval of any holders of Rights, supplement or amend any
provision of this Agreement in any manner, whether or not such supplement or
amendment is adverse to any holder of Rights, and direct the Rights Agent so
to supplement or amend such provision, and the Rights Agent shall so
supplement or amend such provision; PROVIDED, HOWEVER, that from and after
the earliest of (i) the date of the first Section 11(a)(ii) Event, (ii) the
date of the first Section 13(a) Event, (iii) the Redemption Date or (iv) the
Expiration Date, this Agreement shall not be supplemented or amended in any
manner that would materially and adversely affect any holder of outstanding
Rights other than a 10% Stockholder or a Surviving Person.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
Rights Expiration Date, the Company shall not effect any amendment to the
Certificate of Designations for the Preferred Shares that would materially
and adversely affect the rights, privileges or preferences of the Preferred
Shares without the prior approval of the holders of two-thirds or more of the
then outstanding Rights.
Section 28. CERTAIN COVENANTS. Subject to Section 27 hereof and the
other provisions of this Agreement, from and after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall not (a) issue or sell, or permit any Subsidiary to issue or
sell, to a 10% Stockholder or a Surviving Person, or any Affiliate or
Associate of a 10% Stockholder or a Surviving Person, or any Person holding
Voting Shares of the Company that are Beneficially Owned by a 10% Stockholder
or a Surviving Person, (i) any rights, options, warrants or convertible
securities on terms similar to, or that materially adversely affect the value
of, the Rights or (ii) Preferred Shares, Common Shares or shares of any other
class of capital stock, if such sale is intended to or would materially
adversely affect the value of the Rights, or (b) take any other action that
is intended to or would materially adversely affect the value of the Rights.
Section 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become
null and void) any legal or equitable right, remedy or claim under this
Agreement, and this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and such registered holders of Right
Certificates and certificates for Common Shares representing Rights.
27
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute
but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CITY NATIONAL CORPORATION
Attest:
By /s/ Xxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx, Xx.
-------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Assistant Secretary Title: S.V.P. and General Counsel
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
Attest:
By /s/ Xxxxxx Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------- ----------------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Secretary Title: Vice President
29
EXHIBIT A
Form of Right Certificate
Certificate No. __ __________ Rights
NOT EXERCISABLE AFTER THE LATER OF MARCH 13, 2007 OR THE TENTH
ANNIVERSARY OF THE DISTRIBUTION DATE (AS THAT TERM IS DEFINED IN
THE RIGHTS AGREEMENT) OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS THAT TERM IS DEFINED
IN SECTION 1(a) OF THE RIGHTS AGREEMENT AND AS THOSE CIRCUMSTANCES
ARE SPECIFIED IN SECTION 7(f) OF THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A
PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(f) OF THE RIGHTS AGREEMENT.](*)
Right Certificate
CITY NATIONAL CORPORATION
This certifies that _______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of February 26, 1997 (the "Rights
Agreement") between City National Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on the later of March 13, 2007 or the
tenth anniversary of the Distribution Date at the office or agency of the
Rights Agent at 0 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or at the
office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series A
------------------------------
* That portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
Junior Participating Cumulative Preferred Stock, $1.00 par value (the
"Preferred Shares"), of the Company, at a purchase price of $90.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per one
one-hundredths of a Preferred Share set forth above, are the number and
Purchase Price as of ______________, ____, based on the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the occurrence of certain events. This Right Certificate is
subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and
the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent at 0 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Preferred Shares
as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised. Subject to the provisions of
the Rights Agreement, the Rights evidenced by this Certificate may, but are
not required to, be redeemed by the Company at a redemption price of $.001
per Right.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof, a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise 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 shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meetings or other actions affecting shareholders (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.
2
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________, ____.
ATTEST: CITY NATIONAL CORPORATION
By: By:
------------------------------ ---------------------------------
Title: Title:
--------------------------- ------------------------------
Countersigned:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:
------------------------------
Authorized Officer
3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
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:
-------------------------------------------------------------------------------
(To be completed if applicable)
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
-------------------------------------------------------------------------------
4
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 CITY NATIONAL CORPORATION
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
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
5
Signature Guaranteed:
----------------------------------------------------------------------------
(To be completed if applicable)
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
correspond 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 Forms of
Assignment and Election is not completed, the Company 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, in the case of an Assignment, will affix a legend to
that effect on any Right Certificates issued in exchange for this Right
Certificate.
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