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EXHIBIT 4
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
April 11, 2000
between
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
and
STATE STREET BANK & TRUST COMPANY
as Rights Agent
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Table of Contents
Page
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ARTICLE I DEFINITIONS........................................................................................1
1.1 DEFINITIONS.........................................................................................1
ARTICLE II THE RIGHTS........................................................................................7
2.1 SUMMARY OF RIGHTS...................................................................................7
2.2 LEGEND ON COMMON STOCK CERTIFICATES.................................................................7
2.3 EXERCISE OF RIGHTS; SEPARATION OF RIGHTS............................................................8
2.4 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS.....................................................9
2.5 DATE ON WHICH EXERCISE IS EFFECTIVE................................................................11
2.6 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES..............................11
2.7 REGISTRATION. REGISTRATION OF TRANSFER AND EXCHANGE...............................................11
2.8 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES..........................................12
2.9 PERSONS DEEMED OWNERS..............................................................................13
2.10 DELIVERY AND CANCELLATION OF CERTIFICATES..........................................................13
2.11 AGREEMENT OF RIGHTS HOLDERS........................................................................13
ARTICLE III ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS.................................14
3.1 FLIP-IN............................................................................................14
3.2 FLIP-OVER..........................................................................................16
ARTICLE IV THE RIGHTS AGENT.................................................................................16
4.1 GENERAL............................................................................................16
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT..........................................17
4.3 DUTIES OF RIGHTS AGENT.............................................................................18
4.4 CHANGE OF RIGHTS AGENT.............................................................................19
ARTICLE V MISCELLANEOUS.....................................................................................20
5.1 REDEMPTION.........................................................................................20
5.2 EXPIRATION.........................................................................................21
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES................................................................21
5.4 SUPPLEMENTS AND AMENDMENTS.........................................................................21
5.5 FRACTIONAL SHARES..................................................................................21
5.6 RIGHTS OF ACTION...................................................................................22
5.7 HOLDER OF RIGHTS NOT DEEMED A STOCKHOLDER..........................................................22
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5.8 NOTICE OF PROPOSED ACTIONS.........................................................................22
5.9 NOTICES............................................................................................23
5.10 SUSPENSION OF EXERCISABILITY.......................................................................23
5.11 COSTS OF ENFORCEMENT...............................................................................24
5.12 SUCCESSORS.........................................................................................24
5.13 BENEFITS OF THIS AGREEMENT.........................................................................24
5.14 DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC...........................................24
5.15 DESCRIPTIVE HEADINGS...............................................................................24
5.16 GENERAL LIMITATION ON REDEMPTION, MODIFICATION AND TERMINATION OF RIGHTS BY FUTURE
DIRECTORS..........................................................................................25
5.17 GOVERNING LAW......................................................................................25
5.18 COUNTERPARTS.......................................................................................25
5.19 SEVERABILITY.......................................................................................25
EXHIBITS
Exhibit A Form of Rights Certificate (together with Form of Election to
Exercise)
Exhibit B Form of Articles Supplementary
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended from time to time, this
"Agreement"), dated as of April 11, 1999, between Hanover Capital Mortgage
Holdings, Inc., a Maryland corporation (the "Company"), and State Street Bank &
Trust Company, a Massachusetts Trust Company, as Rights Agent (the "Rights
Agent," which term shall include any successor Rights Agent hereunder).
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
April 28, 2000 (the "Record Time") and (b) as provided in SECTION 2.4,
authorized the issuance of one Right in respect of each share of Common Stock
issued after the Record Time and prior to the Separation Time (as hereinafter
defined) and, to the extent provided in SECTION 5.3, each share of Common Stock
issued after the Separation Time;
WHEREAS, subject to the terms and conditions hereof, each Right entitles
the holder thereof, after the Separation Time, to purchase securities or assets
of the Company (or, in certain cases, securities of certain other entities)
pursuant to the terms and subject to the conditions set forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf
of the Company, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
"ACQUIRING PERSON" shall mean any Person who is a Beneficial Owner of 10%
or more of the outstanding shares of Common Stock (or in the case of Xxxx X.
Xxxxxxxx, 18% or more of the outstanding shares of Common Stock or in the case
of Xxxxxxx Xxxxx, 17% or more of the outstanding shares of Common Stock);
PROVIDED, HOWEVER, that the term "Acquiring Person" shall not include any Person
(i) who shall become the Beneficial Owner of 10% or more (or in the case of Xxxx
X. Xxxxxxxx, 18% or more of the outstanding shares of Common Stock or in the
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case of Xxxxxxx Xxxxx, 17% or more of the outstanding shares of Common Stock) of
the outstanding shares of Common Stock solely as a result of an acquisition by
the Company of shares of Common Stock, until such time hereafter or thereafter
as any of such Persons shall become the Beneficial Owner (other than by means of
a stock dividend or stock split) of any additional shares of Common Stock, (ii)
who becomes the Beneficial Owner of 10% or more (or in the case of Xxxx X.
Xxxxxxxx, 18% or more of the outstanding shares of Common Stock or in the case
of Xxxxxxx Xxxxx, 17% or more of the outstanding shares of Common Stock) of the
outstanding shares of Common Stock but who acquired Beneficial Ownership of
shares of Common Stock without any plan or intention to seek or affect control
of the Company, if, upon notice by the Company, such Person promptly enters into
an irrevocable commitment with the Company to divest, and thereafter promptly
divests (without exercising or retaining any power, including voting, with
respect to such shares), sufficient shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) so that
such Person ceases to be the Beneficial Owner of 10% or more (or in the case of
Xxxx X. Xxxxxxxx, 18% or more of the outstanding shares of Common Stock or in
the case of Xxxxxxx Xxxxx, 17% or more of the outstanding shares of Common
Stock) of the outstanding shares of Common Stock or (iii) who Beneficially Owns
shares of Common Stock consisting solely of one or more of (A) shares of Common
Stock Beneficially Owned pursuant to the grant or exercise of an option granted
to such Person (an "OPTION HOLDER") by the Company in connection with an
agreement to merge with, or acquire, the Company entered into prior to a Flip-in
Date, (B) shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock), Beneficially owned by such Option Holder
or its Affiliates or Associates at the time of grant of such option and (C)
shares of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock) acquired by Affiliates or Associates of such
Option Holder after the time of such grant which, in the aggregate, amount to
less than 1% of the outstanding shares of Common Stock. In addition, the
Company, any wholly-owned Subsidiary of the Company and any employee stock
ownership or other employee benefit plan of the Company or a wholly-owned
Subsidiary of the Company shall not be an Acquiring Person.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act, as such Rule is in effect on
the date of this Agreement.
"AGREEMENT" shall have the meaning set forth in the preamble.
A Person shall be deemed the "BENEFICIAL OWNER," and to have "BENEFICIAL
OWNERSHIP" of, and to "BENEFICIALLY OWN," any securities as to which such Person
or any of such Person's Affiliates or Associates is or may be deemed to be the
beneficial owner of pursuant to Rule l3d-3 and l3d-5 under the Exchange Act, as
such Rules are in effect on the date of this Agreement, as well as any
securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be
deemed the "Beneficial Owner," or to have "Beneficial Ownership" of, or to
"Beneficially
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Own," any security (i) solely because such security has been tendered pursuant
to a tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered security is accepted for payment or
exchange or (ii) solely because such Person or any of such Person's Affiliates
or Associates has or shares the power to vote or direct the voting of such
security pursuant to a revocable proxy given in response to a public proxy or
consent solicitation made to more than ten holders of shares of a class of stock
of the Company registered under SECTION 12 of the Exchange Act and pursuant to,
and in accordance with, the applicable rules and regulations under the Exchange
Act, except if such power (or the arrangements relating thereto) is then
reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar
provision of a comparable or successor report). Notwithstanding the foregoing,
no officer or director of the Company shall be deemed to Beneficially Own any
securities of any other Person by virtue of any actions such officer or director
takes in such capacity. For purposes of this Agreement, in determining the
percentage of the outstanding shares of Common Stock with respect to which a
Person is the Beneficial Owner, all shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the City of New York are generally 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 City
time on such date or, if such date is not a Business Day, 5:00 p.m. New York
City time on the next succeeding Business Day.
"COMMON STOCK" shall mean the shares of Common Stock, par value $0.01 per
share, of the Company.
"COMPANY" shall have the meaning set forth in the preamble.
"CONTROL" shall have the meaning set forth in the definition of Flip-over
Transaction or Event.
"ELECTION TO EXERCISE" shall have the meaning set forth in SECTION 2.3(d).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCHANGE RATIO" shall have the meaning set forth in SECTION 3.1(c) hereof.
"EXCHANGE TIME" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to SECTION 3.1(c) hereof.
"EXERCISE PRICE" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Exercise Price shall
equal $17.00.
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"EXPANSION FACTOR" shall have the meaning set forth in SECTION 2.4(a)
hereof.
"EXPIRATION TIME" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time, (iii) the close of business on the tenth anniversary of the
Record Time and (iv) immediately prior to the effective time of a consolidation,
merger or share exchange of the Company (A) into another corporation or (B) with
another corporation in which the Company is the surviving corporation but Common
Stock is converted into cash and/or securities of another corporation, in either
case pursuant to an agreement entered into by the Company prior to a Stock
Acquisition Date.
"FLIP-IN DATE" shall mean the tenth business day after any Stock
Acquisition Date or such earlier or later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Flip-in
Date that would otherwise have occurred.
"FLIP-OVER ENTITY," for purposes of SECTION 3.2, shall mean (i) in the case
of a Flip-over Transaction or Event described in clause (i) of the definition
thereof, the Person issuing any securities into which shares of Common Stock are
being converted or exchanged and, if no such securities are being issued, the
other party to such Flip-over Transaction or Event and (ii) in the case of a
Flip-over Transaction or Event referred to in clause (ii) of the definition
thereof, the Person receiving the greatest portion of the (A) assets or (B)
operating income or cash flow being transferred in such Flip-over Transaction or
Event, provided in all cases if such Person is a subsidiary of a corporation,
the parent corporation shall be the Flip-Over Entity.
"FLIP-OVER STOCK" shall mean the capital stock (or similar equity interest)
with the greatest voting power in respect of the election of directors (or other
persons similarly responsible for direction of the business and affairs) of the
Flip-Over Entity.
"FLIP-OVER TRANSACTION OR EVENT" shall mean a transaction or series of
transactions after a Flip-in Date in which, directly or indirectly, (i) the
Company shall consolidate or merge or participate in a share exchange with any
other Person if, at the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with respect to any such
consolidation, merger or share exchange, the Acquiring Person Controls the Board
of Directors of the Company and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or share
exchange relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Common Stock or (B) the Person
with whom the transaction or series of transactions occurs is the Acquiring
Person or an Affiliate or Associate of the Acquiring Person or (ii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow, of the Company and its Subsidiaries
(taken as a whole) to any Person (other than the Company or one or more of its
wholly owned Subsidiaries) or to two or more such Persons which are Affiliates
or Associates or otherwise acting in concert, if, at the time of the entry by
the Company (or any such Subsidiary)
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into an agreement with respect to such sale or transfer of assets, the Acquiring
Person Controls the Board of Directors of the Company. An Acquiring Person shall
be deemed to "CONTROL" the Company's Board of Directors when, following a
Flip-in Date, the persons who were directors of the Company (or persons
nominated and/or appointed as directors by vote of a majority of such persons)
before the Stock Acquisition Date shall cease to constitute a majority of the
Company's Board of Directors.
"FUTURE DIRECTOR" shall have the meaning set forth in SECTION 5.16 hereof.
"MARKET PRICE" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the twenty (20) consecutive Trading Days through and
including the Trading Day immediately preceding such date; PROVIDED, HOWEVER,
that if an event of a type analogous to any of the events described in SECTION
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of twenty (20) Trading Days not to
be fully comparable with the closing price on such date, each such closing price
so used shall be appropriately adjusted in order to make it fully comparable
with the closing price on such date. The closing price per share of any
securities on any date shall be the last reported sale price, regular way, or,
in case no such sale takes place or is quoted on such date, the average of the
closing bid and asked prices, regular way, for each share of such securities, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the American
Stock Exchange or, if the securities are not listed or admitted to trading on
the American Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the securities are listed or admitted to
trading or, if the securities are not listed or admitted to trading on any
national securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then in
use, or, if on any such date the securities are not listed or admitted to
trading on any national securities exchange or quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the securities selected by the Board of
Directors of the Company; PROVIDED, HOWEVER, that if on any such date the
securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the counter market, the closing price per share
of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights Agent.
"OPTION HOLDER" shall have the meaning set forth in the definition of
Acquiring Person.
"PERSON" shall mean any individual, firm, partnership, association, group
(as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934,
as such Rule is in effect on the date of this Agreement), corporation or other
entity.
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"PREFERRED STOCK" shall mean the series of Participating Preferred Stock,
par value $0.01 per share, of the Company created by an Articles Supplementary
in substantially the form set forth in EXHIBIT B hereto appropriately completed.
"RECORD TIME" shall have the meaning set forth in the Recitals.
"REDEMPTION PRICE" shall mean an amount equal to one cent, $0.01.
"REDEMPTION TIME" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to SECTION 5.1 hereof.
"RIGHT" shall have the meaning set forth in the Recitals.
"RIGHTS AGENT" shall have the meaning set forth in the Preamble.
"RIGHTS CERTIFICATE" shall have the meaning set forth in SECTION 2.3(c)
hereof.
"RIGHTS REGISTER" shall have the meaning set forth in SECTION 2.7(a)
hereof.
"SEPARATION TIME" shall mean the close of business on the earlier of (i)
the tenth business day (or such later date as the Board of Directors of the
Company may from time to time fix by resolution adopted prior to the Separation
Time that would otherwise have occurred) after the date on which any Person
commences a tender or exchange offer which, if consummated, would result in such
Person's becoming an Acquiring Person and (ii) the Flip-in Date; PROVIDED, that
if the foregoing results in the Separation Time being prior to the Record Time,
the Separation Time shall be the Record Time and PROVIDED FURTHER, that if any
tender or exchange offer referred to in clause (i) of this paragraph is
cancelled, terminated or otherwise withdrawn prior to the Separation Time
without the purchase of any shares of Common Stock pursuant thereto, such offer
shall be deemed, for purposes of this paragraph, never to have been made.
"STOCK ACQUISITION DATE" shall mean the first date of public announcement
by the Company (by any means) or by an Acquiring Person (including by means of
filing a Schedule 13D or Schedule 13G under the Securities Exchange Act of 1934
(or any comparable or successor report or schedule) or an amendment thereto)
that a Person has become an Acquiring Person.
"SUBSIDIARY" of any specified Person shall mean any corporation or other
entity of which a majority of the voting power of the equity securities or a
majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"TRADING DAY," when used with respect to any securities, shall mean a day
on which the American Stock Exchange is open for the transaction of business or,
if such securities are not listed or admitted to trading on the American Stock
Exchange, a day on which the principal national securities exchange on which
such securities are listed or admitted to trading is open
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for the transaction of business or, if such securities are not listed or
admitted to trading on any national securities exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 SUMMARY OF RIGHTS.
As soon as practicable after the Record Time, the Company will mail a
letter summarizing the terms of the Rights to each holder of record of Common
Stock as of the Record Time, at such holder's address as shown by the records of
the Company.
2.2 LEGEND ON COMMON STOCK CERTIFICATES.
Certificates for the Common Stock issued after the Record Time but prior to
the Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
Until the Separation Time (as defined in the Rights Agreement
referred to below), this certificate also evidences and
entitles the holder hereof to certain Rights as set forth in
a Stockholder Protection Rights Agreement, dated as of April
11, 2000 (as such may be amended from time to time, the
"Rights Agreement"), between Hanover Capital Mortgage
Holdings, Inc. (the "Company") and State Street Bank & Trust
Company, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may become exercisable for
securities or assets of the Company or securities of another
entity, may be exchanged for shares of Common Stock or other
securities or assets of the Company, may expire, may become
void (if they are "Beneficially Owned" by an "Acquiring
Person" or an Affiliate or Associate thereof, as such terms
are defined in the Rights Agreement, or by any transferee of
any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing
of a copy of the Rights Agreement to the holder of this
certificate without charge after the receipt of a written
request therefor.
Certificates representing shares of Common Stock that are issued and
outstanding at the Record Time shall evidence one Right for each share of Common
Stock evidenced thereby notwithstanding the absence of the foregoing legend.
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2.3 EXERCISE OF RIGHTS; SEPARATION OF RIGHTS.
(a) Subject to SECTIONS 3.1, 5.1 and 5.10 and subject to adjustment as
herein set forth, each Right will entitle the holder thereof, after the
Separation Time and prior to the Expiration Time, to purchase, for the Exercise
Price, one one-hundredth of a share of Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii) each
Right will be evidenced by the certificate for the associated share of Common
Stock (together, in the case of certificates issued prior to the Record Time,
with the letter mailed to the record holder thereof pursuant to SECTION 2.1) and
will be transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share.
(c) Subject to the terms and conditions hereof, after the Separation Time
and prior to the Expiration Time, the Rights (i) may be exercised and (ii) may
be transferred independently of shares of Common Stock. Promptly following the
Separation Time, the Rights Agent will mail to each holder of record of Common
Stock as of the Separation Time (other than any Person whose Rights have become
void pursuant to SECTION 3.1(b)), at such holder's address as shown by the
records of the Company (the Company hereby agreeing to furnish copies of such
records to the Rights Agent for this purpose), (x) a certificate (a "Rights
Certificate") in substantially the form of EXHIBIT A hereto appropriately
completed, representing the number of Rights held by such holder at the
Separation Time and having 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 law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any national securities
exchange or quotation system on which the Rights may from time to time be listed
or traded, or to conform to usage, and (y) a disclosure statement describing the
Rights.
(d) Subject to the terms and conditions hereof, Rights may be exercised on
any Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Exercise (an "Election to Exercise") substantially in the
form attached to the Rights Certificate duly completed, accompanied by payment
in cash, or by certified or official bank check or money order payable to the
order of the Company, of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any transfer tax
or charge which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or delivery of
certificates for shares or depositary receipts (or both) in a name other than
that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in SECTION 2.3(d), and subject to the terms
and conditions hereof, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates evidencing such number of
shares or other securities to be purchased (the Company hereby
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irrevocably authorizing its transfer agents to comply with all such
requisitions) and (B) if the Company elects pursuant to SECTION 5.5 not to issue
certificates representing fractional shares, requisition from the depositary
selected by the Company depositary receipts representing the fractional shares
to be purchased or requisition from the Company the amount of cash to be paid in
lieu of fractional shares in accordance with SECTION 5.5 and (ii) after receipt
of such certificates, depositary receipts and/or cash, deliver the same to or
upon the order of the registered holder of such Rights Certificate, registered
(in the case of certificates or depositary receipts) in such name or names as
may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights Agent
to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such action
as may be necessary to ensure that all shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized, executed, issued
and delivered and fully paid and nonassessable; (ii) take all such action as may
be necessary to comply with any applicable requirements of the Securities Act of
1933 or the Exchange Act, and the rules and regulations thereunder, and any
other applicable law, rule or regulation, in connection with the issuance of any
shares upon exercise of Rights; and (iii) pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the original issuance or delivery of the Rights Certificates or of any shares
issued upon the exercise of Rights, PROVIDED, that the Company shall not be
required to pay any transfer tax or charge which may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares in a name other than that of the
holder of the Rights being transferred or exercised.
2.4 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS.
(a) In the event the Company shall at any time after the Record Time and
prior to the Separation Time (i) declare or pay a dividend on Common Stock
payable in Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares of Common
Stock, (x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment divided by the
number of shares of Common Stock (the "Expansion Factor") that a holder of one
share of Common Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof and (y) each Right held
prior to such adjustment will become that number of Rights equal to the
Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in
respect of such dividend, subdivision or combination, so that each such share of
Common Stock will have exactly one Right associated with it. Each adjustment
made pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.
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In the event the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share. To the
extent provided in SECTION 5.3, Rights shall be issued by the Company in respect
of shares of Common Stock that are issued or sold by the Company after the
Separation Time.
(b) In the event the Company shall at any time after the Record Time and
prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this SECTION
2.4 shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this SECTION 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.
(d) Rights certificates shall represent the securities purchasable under
the terms of this Agreement, including any adjustment or change in the
securities purchasable upon exercise of the Rights, even though such
certificates may continue to express the securities purchasable at the time of
issuance of the initial Rights Certificates.
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2.5 DATE ON WHICH EXERCISE IS EFFECTIVE.
Each person in whose name any certificate for shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the shares represented thereby on the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date upon which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of the
Company are open.
2.6 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS CERTIFICATES.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer or one of its Managing
Directors, and countersigned by its Secretary, an Assistant Secretary or its
Chief Financial Officer. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Company learns of the Separation Time, the Company will
notify the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Company to the Rights Agent for counter-signature,
and, subject to SECTION 3.1(b), the Rights Agent shall manually countersign and
deliver such Rights Certificates to the holders of the Rights pursuant to
SECTION 2.3(c) hereof. No Rights Certificate shall be valid for any purpose
unless manually countersigned by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.7 REGISTRATION. REGISTRATION OF TRANSFER AND EXCHANGE.
(a) After the Separation Time, the Company will cause to be kept a
register (the "Rights Register") in which, subject to such reasonable
regulations as it may prescribe, the Company will provide for the registration
and transfer of Rights. The Rights Agent is hereby appointed "Rights Registrar"
for the purpose of maintaining the Rights Register for the Company and
registering Rights and transfers of Rights after the Separation Time as herein
provided. In the event that the Rights Agent shall cease to be the Rights
Registrar, the Rights Agent will have the right to examine the Rights Register
at all reasonable times after the Separation Time.
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After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and subject
to the provisions of SECTION 2.7(c) and (d), the Company will execute, and the
Rights Agent will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Rights Certificates evidencing the same aggregate
number of Rights as did the Rights Certificate so surrendered.
(b) Except as otherwise provided in SECTION 3.1(b), all Rights issued upon
any registration of transfer or exchange of Rights Certificates shall be the
valid obligations of the Company, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such registration
of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this SECTION 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
(d) The Company shall not be required to register the transfer or exchange
of any Rights after such Rights have become void under SECTION 3.1(b), been
exchanged under SECTION 3.1(c) or been redeemed under SECTION 5.1.
2.8 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES.
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent
prior to the Expiration Time, then, subject to SECTIONS 3.1(b), 3.1(c) and 5.1,
the Company shall execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same number of Rights
as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior
to the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity as
may be required by them to save each of them and any of their agents harmless,
then, subject to SECTIONS 3.1(b), 3.1(c) and 5.1 and in the absence of notice to
the Company or the Rights Agent that such Rights Certificate has been acquired
by a BONA FIDE purchaser, the Company shall execute and upon its request the
Rights Agent shall countersign and deliver, in lieu of any such destroyed, lost
or stolen Rights Certificate, a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this SECTION 2.8, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Rights
Agent) connected therewith.
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(d) Every new Rights Certificate issued pursuant to this SECTION 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and, subject to SECTION 3.1(b) shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly
issued hereunder.
2.9 PERSONS DEEMED OWNERS.
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name such Rights Certificate
(or, prior to the Separation Time, such Common Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby for all
purposes whatsoever, including the payment of the Redemption Price and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary. As used in this Agreement, unless the context otherwise requires, the
term "holder" of any Rights shall mean the registered holder of such Rights (or,
prior to the Separation Time, the associated shares of Common Stock).
2.10 DELIVERY AND CANCELLATION OF CERTIFICATES.
All Rights Certificates surrendered upon exercise or for registration of
transfer or exchange shall, if surrendered to any person other than the Rights
Agent, be delivered to the Rights Agent and, in any case, shall be promptly
cancelled by the Rights Agent. The Company may at any time deliver to the Rights
Agent for cancellation any Rights Certificates previously countersigned and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly cancelled
by the Rights Agent. No Rights Certificates shall be countersigned in lieu of or
in exchange for any Rights Certificates cancelled as provided in this SECTION
2.10, except as expressly permitted by this Agreement. The Rights Agent shall
destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Company.
2.11 AGREEMENT OF RIGHTS HOLDERS.
Every holder of Rights by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
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(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under the
circumstances set forth in SECTION 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to SECTION 2.4(b) or 5.4 hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN.
(a) In the event that prior to the Expiration Time a Flip-in Date shall
occur, except as provided in this SECTION 3.1, each Right shall constitute the
right to purchase from the Company, upon exercise thereof in accordance with the
terms hereof (but subject to SECTION 5.10), that number of shares of Common
Stock having an aggregate Market Price on the Stock Acquisition Date equal to
twice the Exercise Price for an amount in cash equal to the Exercise Price (such
right to be appropriately adjusted in order to protect the interests of the
holders of Rights generally in the event that on or after such Stock Acquisition
Date an event of a type analogous to any of the events described in SECTION
2.4(a) or (b) shall have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete the certification set forth at the end of the form of assignment or
notice of election to exercise and provide such additional evidence of the
identity of the Beneficial owner and its Affiliates and Associates (or former
Beneficial Owners and their Affiliates and Associates) as the Company shall
reasonably request, then the Company shall be entitled conclusively to deem the
Beneficial Owner thereof to be an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced thereby to be void and not transferable or exercisable.
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(c) The Board of Directors of the Company may, at its option, at any time
after a Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of
SECTION 3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Separation Time an
event of a type analogous to any of the events described in SECTION 2.4(a) or
(b) shall have occurred with respect to the Common Stock (such exchange ratio,
as adjusted from time to time, being hereinafter referred to as the "Exchange
Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right (other
than Rights that have become void pursuant to SECTION 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock equal to
the Exchange Ratio. Promptly after the action of the Board of Directors electing
to exchange the Rights, the Company shall give notice thereof (specifying the
steps to be taken to receive shares of Common Stock in exchange for Rights) to
the Rights Agent and the holders of the Rights (other than Rights that have
become void pursuant to SECTION 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with SECTION 5.9.
Each Person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this SECTION 3.1(c) or SECTION 3.1(d) shall for
all purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of any applicable taxes and other governmental charges payable by the holder was
made; PROVIDED, HOWEVER, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the stock
transfer books of the Company are open.
(d) Whenever the Company shall become obligated under SECTION 3.1(a) or
(c) to issue shares of Common Stock upon exercise of or in exchange for Rights,
the Company, at its option, may substitute therefor shares of Preferred Stock,
at a ratio of one one-hundredth of a share of Preferred Stock for each share of
Common Stock so issuable.
(e) In the event that there shall not be sufficient authorized but
unissued shares of Common Stock or Preferred Stock of the Company to permit the
exercise or exchange in full of the Rights in accordance with SECTION 3.1(a) or
(c), and the Company elects not to, or is otherwise unable to, make the exchange
referred to in SECTION 3.1(c), the Company shall either (i) call a meeting of
stockholders seeking approval to cause sufficient additional shares to be
authorized (provided that if such approval is not obtained the Company will take
the action specified in clause (ii) of this sentence) or (ii) take such action
as shall be necessary to ensure and provide, to the extent permitted by
applicable law and any agreements or instruments in
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effect on the Stock Acquisition Date to which it is a party, that each Right
shall thereafter constitute the right to receive, (x) at the Company's option,
either (A) in return for the Exercise Price, debt or equity securities or other
assets (or a combination thereof) having a fair value equal to twice the
Exercise Price, or (B) without payment of consideration (except as otherwise
required by applicable law), debt or equity securities or other assets (or a
combination thereof) having a fair value equal to the Exercise Price, or (y) if
the Board of Directors of the Company elects to exchange the Rights in
accordance with SECTION 3.1(c), debt or equity securities or other assets (or a
combination thereof) having a fair value equal to the product of the Market
Price of a share of Common Stock on the Flip-in Date times the Exchange Ratio in
effect on the Flip-in Date, where in any case set forth in (x) or (y) above the
fair value of such debt or equity securities or other assets shall be as
determined in good faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking firm.
3.2 FLIP-OVER.
(a) Prior to the Expiration Time, the Company shall not enter into any
agreement with respect to, consummate or permit to occur any Flip-over
Transaction or Event unless and until it shall have entered into a supplemental
agreement with the Flip-over Entity, for the benefit of the holders of the
Rights, providing that, upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with the
terms hereof, that number of shares of Flip-over Stock of the Flip-over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in SECTION 2.4(a) or (b) shall have
occurred with respect to the Flip-over Stock) and (ii) the Flip-over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this SECTION
3.2 shall apply to successive Flip-over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to SECTION 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments that would eliminate or otherwise diminish in any material respect
the benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 GENERAL.
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(a) The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done 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 certificate for
securities purchasable upon exercise of Rights, Rights Certificate, certificate
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.
4.2 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 is a party, or any corporation succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
will 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 4.4 hereof. In case
at the time such successor Rights Agent succeeds to the agency created by this
Agreement any of the Rights Certificates have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have not been
countersigned, any successor Rights Agent may countersign such Rights
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 Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed
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name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
4.3 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 Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems 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 a person believed by the Rights Agent to be the
Chairman of the Board, the President or any Managing Director and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate will 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 will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will 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 certificate for securities
purchasable upon exercise of Rights or Rights Certificate (except its
countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
SECTION 3.1(b) hereof) or any adjustment required under the provisions of
SECTION 2.4, 3.1 or 3.2 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment
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(except with respect to the exercise of Rights after receipt of the certificate
contemplated by SECTION 2.4 describing any such adjustment); nor will it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any securities purchasable upon exercise of
Rights or any Rights or as to whether any securities purchasable upon exercise
of Rights will, when issued, be duly and validly authorized, executed, issued
and delivered and 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
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Managing Director or the Secretary or any Assistant Secretary
or the Treasurer or any Assistant Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in Common Stock, Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof
4.4 CHANGE OF RIGHTS AGENT.
The Rights Agent may resign and be discharged from its duties under this
Agreement upon 90 days' notice (or such lesser notice as is acceptable to the
Company) in writing mailed to the Company and to each transfer agent of Common
Stock by registered or certified mail, and to the holders of the Rights in
accordance with SECTION 5.9. The Company may remove the Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent and to each transfer
agent of the Common Stock by registered or certified mail, and to the holders of
the Rights in accordance with SECTION 5.9. If the Rights Agent should resign or
be removed or otherwise become incapable of acting, the Company will appoint a
successor to the Rights Agent. If the
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Company fails to make such appointment within a period of thirty (30) days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
any Rights (which holder shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the holder of any Rights 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 any state of the United States, in good standing, which is
authorized under such laws to exercise the powers of the Rights Agent
contemplated by this Agreement and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the holders of the Rights. Failure to give any
notice provided for in this SECTION 4.4, 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.
ARTICLE V
MISCELLANEOUS
5.1 REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the close of business on the Flip-in Date, elect to redeem all (but not
less than all) the then outstanding Rights at the Redemption Price and the
Company, at its option, may pay the Redemption Price either in cash or shares of
Common Stock or other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at least equivalent in
value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights (or, if the resolution of the Board of Directors
electing to redeem the Rights states that the redemption will not be effective
until the occurrence of a specified future time or event, upon the occurrence of
such future time or event), without any further action and without any notice,
the right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash or securities,
as determined by the Board of Directors. Promptly after the Rights are redeemed,
the Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice in accordance with
SECTION 5.9.
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5.2 EXPIRATION.
The Rights and this Agreement shall expire at the Expiration Time and no
Person shall have any rights pursuant to this Agreement or any Right after the
Expiration Time, except, if the Rights are exchanged or redeemed, as provided in
SECTION 3.1 or 5.1 hereof , respectively.
5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the number or kind or class of shares of
stock purchasable upon exercise of Rights made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock by the Company following the Separation Time and prior to
the Expiration Time pursuant to the terms of securities convertible or
redeemable into shares of Common Stock or to options, in each case issued or
granted prior to, and outstanding at, the Separation Time, the Company shall
issue to the holders of such shares of Common Stock, Rights Certificates
representing the appropriate number of Rights in connection with the issuance or
sale of such shares of Common Stock; PROVIDED, HOWEVER, in each case, (i) no
such Rights Certificate shall be issued, if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or to the Person to whom
such Rights Certificates would be issued, (ii) no such Rights Certificates shall
be issued if, and to the extent that, appropriate adjustment shall have
otherwise been made in lieu of the issuance thereof, and (iii) the Company shall
have no obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 SUPPLEMENTS AND AMENDMENTS.
The Company and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Rights (i) prior to the
close of business on the Flip-in Date, in any respect and (ii) after the close
of business on the Flip-in Date, to make any changes that the Company may deem
necessary or desirable and which shall not materially adversely affect the
interests of the holders of Rights generally or in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
inconsistent with any other provisions herein or otherwise defective. The Rights
Agent will duly execute and deliver any supplement or amendment hereto requested
by the Company which satisfies the terms of the preceding sentence.
5.5 FRACTIONAL SHARES.
If the Company elects not to issue certificates representing fractional
shares upon exercise or redemption of Rights, the Company shall, in lieu
thereof, in the sole discretion of the
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Board of Directors, either (a) evidence such fractional shares by depositary
receipts issued pursuant to an appropriate agreement between the Company and a
depositary selected by it, providing that each holder of a depositary receipt
shall have all of the rights, privileges and preferences to which such holder
would be entitled as a beneficial owner of such fractional share, or (b) pay to
the registered holder of such Rights the appropriate fraction of the Market
Price per share in cash.
5.6 RIGHTS OF ACTION.
Subject to the terms of this Agreement (including SECTIONS 3.1(b), 5.14 and
5.15), rights of action in respect of this Agreement, other than rights of
action vested solely in the Rights Agent, are vested in the respective holders
of the Rights; and any holder of any Rights, without the consent of the Rights
Agent or of the holder of any other Rights, may, on such holder's own behalf and
for such holder's own benefit and the benefit of other holders of Rights,
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 such holder's Rights in the manner provided in such holder's Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
5.7 HOLDER OF RIGHTS NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of shares or any other
securities which may at any time be issuable on the exercise of such Rights, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in SECTION 5.8 hereof),
or to receive dividends or subscription rights, or otherwise, until such Rights
shall have been exercised or exchanged in accordance with the provisions hereof.
5.8 NOTICE OF PROPOSED ACTIONS.
In case the Company shall propose after the Separation Time and prior to
the Expiration Time (i) to effect or permit a Flip-over Transaction or Event or
(ii) to effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a Right, in
accordance with SECTION 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-over Transaction or Event,
liquidation, dissolution, or winding up is to take place, and such notice shall
be so given at least twenty (20) Business Days prior to the date of the taking
of such proposed action.
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5.9 NOTICES.
Notices or demands authorized or required by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights to or on the Company
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
State Street Bank & Trust Company
c/o Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administrator
Any notice or demand authorized or required by this Agreement to be given
or made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Hanover Capital Mortgage Holdings, Inc.
00 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Notices or demands authorized or required by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.
5.10 SUSPENSION OF EXERCISABILITY.
To the extent that the Company determines in good faith that some action
will or need be taken pursuant to SECTION 3.1 or to comply with federal or state
securities laws, the Company may suspend the exercisability of the Rights for a
reasonable period in order to take such action or comply with such laws. In the
event of any such suspension, the Company shall issue as promptly as practicable
a public announcement stating that the exercisability or exchangeability of the
Rights has been temporarily suspended. Notice thereof pursuant to SECTION 5.9
shall not be required.
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Failure to give a notice pursuant to the provisions of this Agreement shall
not affect the validity of any action taken hereunder.
5.11 COSTS OF ENFORCEMENT.
The Company agrees that if the Company or any other Person the securities
of which are purchasable upon exercise of Rights fails to fulfill any of its
obligations pursuant to this Agreement, then the Company or such Person will
reimburse the holder of any Rights for the costs and expenses (including legal
fees) incurred by such holder in actions to enforce such holder's rights
pursuant to any Rights or this Agreement.
5.12 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.
5.13 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 holders of the Rights 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 the
holders of the Rights.
5.14 DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors of the Company to any liability to the holders of
the Rights.
5.15 DESCRIPTIVE HEADINGS.
Descriptive headings appear herein for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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5.16 GENERAL LIMITATION ON REDEMPTION, MODIFICATION AND TERMINATION OF RIGHTS BY
FUTURE DIRECTORS.
Notwithstanding any provision of this Rights Agreement to the contrary, in
addition to any other approval that may be necessary, any redemption,
modification or termination of the Rights requiring the approval of the Board of
Directors of the Company must be approved by a majority of the members of the
Company's Board of Directors who are not Future Directors. For purposes of this
Section, the term "Future Director" shall mean any director who became a member
of the Company's Board of Directors less than 180 prior to such redemption,
modification or termination.
5.17 GOVERNING LAW.
THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF MARYLAND AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.
5.18 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
5.19 SEVERABILITY.
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
"COMPANY" HANOVER CAPITAL MORTGAGE HOLDINGS,
INC.
/s/ Xxxx X. Xxxxxxxx
By: -----------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and CEO
"RIGHTS AGENT" STATE STREET BANK & TRUST COMPANY
/s/ Xxxxxxx Xxxxx
By: -----------------------------
Name: Xxxxxxx Xxxxx
Title: President
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EXHIBIT A
[Form of Rights Certificate]
Certificate No. W- ________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES OR
ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
OR TRANSFEREES OF ANY OF THE FOREGOING WILL BE VOID.
Rights Certificate
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
This certifies that _________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Stockholder Protection Rights Agreement, dated as of April
___, 2000 (as amended from time to time, the "Rights Agreement"), between
Hanover Capital Mortgage Holdings, Inc., a Maryland corporation (the "Company"),
and State Street Bank & Trust Company, a Massachusetts Trust Company, as Rights
Agent (the "Rights Agent", which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Separation Time (as such term is defined in the Rights Agreement) and prior to
the close of business on April 28, 2010, one one-hundredth of a fully paid share
of Participating Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), of the Company (subject to adjustment as provided in the Rights
Agreement) at the Exercise Price referred to below, upon presentation and
surrender of this Rights Certificate with the Form of Election to Exercise duly
executed at the principal office of the Rights Agent in The City of New York.
The Exercise Price shall initially be $17.00 per Right and shall be subject to
adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities of the Company
other than Preferred Stock or assets of the Company, all as provided in the
Rights Agreement.
This Rights 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
A-1
31
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
office of the Company and are available without cost upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced by
this Certificate may be (a) redeemed by the Company under certain circumstances,
at its option, at a redemption price of $0.01 per Right or (b) exchanged by the
Company under certain circumstances, at its option, for one share of Common
Stock or one one hundredth of a share of Preferred Stock per Right (or, in
certain cases, other securities or assets of the Company), subject in each case
to adjustment in certain events as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-2
32
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Date: _______________________
ATTEST: HANOVER CAPITAL MORTGAGE HOLDINGS,
INC.
________________________________ By:_______________________________
Secretary
Countersigned:
By:_____________________________
Authorized Signature
A-3
33
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate.)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: __________________________
Signature Guaranteed:
_______________________________
Signature
(Signature must correspond to
name as written upon the face
of this Rights Certificate in
every particular, without
alteration or enlargement or
any change whatsoever)
A-4
34
Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee Medallion program), pursuant to SEC Rule
17Ad-15.
------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights
and shares of Common Stock, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
---------------------------------------
Signature
------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
A-5
35
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: HANOVER CAPITAL MORTGAGE
HOLDINGS, INC.
The undersigned hereby irrevocably elects to exercise _____________ whole
Rights represented by the attached Rights Certificate to purchase the shares of
Participating Preferred Stock issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
___________________________________
Address:___________________________
___________________________________
Social Security or Other Taxpayer
Identification Number: _______________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
___________________________________
Address:___________________________
___________________________________
Social Security or Other Taxpayer
Identification Number: _______________________
Dated: _______________________
Signature Guaranteed:
_____________________________
Signature
(Signature must correspond to
name as written upon the face
of this Rights Certificate in
every particular, without
alteration or enlargement or
any change whatsoever)
A-6
36
Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee Medallion program), pursuant to SEC Rule 17Ad-
15.
------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights
and shares of Common Stock, that the Rights evidenced by this Rights Certificate
are not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
____________________________
Signature
------------------------------------------------------------
NOTICE
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced by such Rights Certificate to be void and not transferable or
exercisable.
A-7
37
EXHIBIT B
FORM OF ARTICLES SUPPLEMENTARY
OF
HANOVER CAPITAL MORTGAGE HOLDINGS, INC.
Hanover Capital Mortgage Holdings, Inc., a Maryland corporation having its
principal office in Baltimore City, Maryland (the "Corporation"), hereby
certifies to the Maryland State Department of Assessments and Taxation that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Charter of the Corporation, the Board of
Directors has duly reclassified 583,000 shares of the Preferred Stock (par value
$0.01 per share) of the Corporation into 583,000 shares of a class designated as
Participating Preferred Stock (par value $0.01 per share) of the Corporation
(hereinafter called this "Series") and has provided for the issuance of such
shares.
SECOND: Subject in all cases to the provisions of Article NINTH of the
Charter of the Corporation with respect to Excess Stock, the following is a
description of the preferences and other rights, voting powers, restrictions,
qualifications, terms and conditions of the Participating Preferred Stock of the
Corporation.
(i) The designation of the Participating Preferred Stock
described in Article FIRST hereof shall be "Participating Preferred
Stock." Each share of this Series shall be identical in all respects
with the other shares of this Series except as to the dates from and
after which dividends thereon shall be cumulative.
(ii) The number of shares in this Series shall initially be
583,000, which number may from time to time be increased or decreased
(but not below the number then outstanding) by the Board of Directors.
Shares of this Series purchased by the Corporation shall be cancelled
and shall revert to authorized but unissued shares of Preferred Stock
undesignated as to series. Shares of this Series may be issued in
fractional shares, which fractional shares shall entitle the holder,
in proportion to such holder's fractional share, to all rights of a
holder of a whole share of this Series.
(iii) The holders of full or fractional shares of this Series
shall be entitled to receive, when and as declared by the Board of
Directors, but only out of funds legally available therefor,
dividends, (A) on each date that dividends or other distributions
(other than dividends or distributions payable in Common Stock of the
Corporation) are payable on or in respect of Common Stock
38
comprising part of the Reference Package (as defined below), in an
amount per whole share of this Series equal to the aggregate amount of
dividends or other distributions (other than dividends or
distributions payable in Common Stock of the Corporation) that would
be payable on such date to a holder of the Reference Package and (B)
on the last day of March, June, September and December in each year,
in an amount per whole share of this Series equal to the excess (if
any) of $4.25 over the aggregate dividends paid per whole share of
this Series during the three month period ending on such last day.
Each such dividend shall be paid to the holders of record of shares of
this Series on the date, not exceeding sixty days preceding such
dividend or distribution payment date, fixed for the purpose by the
Board of Directors in advance of payment of each particular dividend
or distribution. Dividends on each full and each fractional share of
this Series shall be cumulative from the date such full or fractional
share is originally issued; provided that any such full or fractional
share originally issued after a dividend record date and on or prior
to the dividend payment date to which such record date relates shall
not be entitled to receive the dividend payable on such dividend
payment date or any amount in respect of the period from such original
issuance to such dividend payment date.
The term "Reference Package" shall initially mean 100 shares of
Common Stock, par value $0.01 per share ("Common Stock"), of the
Corporation. In the event the Corporation shall at any time after the
close of business on April 28, 2000, (A) declare or pay a dividend on
any Common Stock payable in Common Stock, (B) subdivide any Common
Stock or (C) combine any Common Stock into a smaller number of shares,
then and in each such case the Reference Package after such event
shall be the Common Stock that a holder of the Reference Package
immediately prior to such event would hold thereafter as a result
thereof.
Holders of shares of this Series shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of
full cumulative dividends, as herein provided on this Series.
So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking
junior to this Series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other stock ranking
junior to this Series as to dividends
39
or upon liquidation, nor shall any Common Stock nor any other stock of
the Corporation ranking junior to or on a parity with this Series as
to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange
for stock of the Corporation ranking junior to this Series as to
dividends and upon liquidation), unless, in each case, the full
cumulative dividends (including the dividend to be due upon payment of
such dividend, distribution, redemption, purchase or other
acquisition) on all outstanding shares of this Series shall have been,
or shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation, reclassification
or other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of this Series shall at the
same time be similarly exchanged or changed in an amount per whole
share equal to the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, that a
holder of the Reference Package would be entitled to receive as a
result of such transaction.
(v) In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary,
the holders of full and fractional shares of this Series shall be
entitled, before any distribution or payment is made on any date to
the holders of the Common Stock or any other stock of the Corporation
ranking junior to this Series upon liquidation, to be paid in full an
amount per whole share of this Series equal to the greater of (A)
$1700.00 or (B) the aggregate amount distributed or to be distributed
prior to such date in connection with such liquidation, dissolution or
winding up to a holder of the Reference Package (such greater amount
being hereinafter referred to as the "Liquidation Preference"),
together with accrued dividends to such distribution or payment date,
whether or not earned or declared. If such payment shall have been
made in full to all holders of shares of this Series, the holders of
shares of this Series as such shall have no right or claim to any of
the remaining assets of the Corporation.
In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full all
40
amounts to which such holders are entitled pursuant to the first
paragraph of this SECTION (v), no such distribution shall be made on
account of any shares of any other class or series of Preferred Stock
ranking on a parity with the shares of this Series upon such
liquidation, dissolution or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this
Series, ratably in proportion to the full distributable amounts for
which holders of all such parity shares are respectively entitled upon
such liquidation, dissolution or winding up.
Upon the liquidation, dissolution or winding up of the
Corporation, the holders of shares of this Series then outstanding
shall be entitled to be paid out of assets of the Corporation
available for distribution to its stockholders all amounts to which
such holders are entitled pursuant to the first paragraph of this
SECTION (v) before any payment shall be made to the holders of Common
Stock or any other stock of the Corporation ranking junior upon
liquidation to this Series.
For the purposes of this Section (v), the consolidation or merger
of, or binding share exchange by, the Corporation with any other
corporation shall not be deemed to constitute a liquidation,
dissolution or winding up of the Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of stockholders
required by law or by the Amended Articles of Incorporation, as
amended, of the Corporation, each whole share of this Series shall, on
any matter, vote as a class with any other capital stock comprising
part of the Reference Package and voting on such matter and shall have
the number of votes thereon that a holder of the Reference Package
would have.
(viii) In the event any shares of this Series shall be
reacquired, the shares so reacquired shall revert to the status of
authorized but unissued shares of this Series available for future
issuance and reclassification by the Corporation.
41
IN WITNESS WHEREOF, Hanover Capital Mortgage Holdings, Inc. has caused
these presents to be signed in its name and on its behalf by its Chief Executive
Officer and witnessed by its Secretary on April 28, 2000.
WITNESS: HANOVER CAPITAL MORTGAGE HOLDINGS,
INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------- -------------------------------
Xxxx X. Xxxxxxxx
President and CEO
THE UNDERSIGNED, Xxxx X. Xxxxxxxx, the Chief Executive Officer of Hanover
Capital Mortgage Holdings, Inc., who executed on behalf of the Corporation the
Articles Supplementary of which this certificate is made apart, hereby
acknowledges in the name and on behalf of said Corporation the foregoing
Articles Supplementary to be the corporate act of said Corporation and hereby
certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx
