EMONS TRANSPORTATION GROUP, INC.
and
AMERICAN STOCK TRANSFER &
TRUST COMPANY, as
Rights Agent
______________________________
RIGHTS AGREEMENT
______________________________
Dated as of April 23, 1999
TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions.............................. 1
Section 2. Appointment of Rights Agent...................... 5
Section 3. Issue of Right Certificates...................... 5
Section 4. Form of Right Certificates....................... 7
Section 5. Countersignature and Registration................ 8
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates............................... 8
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights........................ 9
Section 8. Cancellation and Destruction of Right
Certificates..................................... 11
Section 9. Reservation and Availability of Common
Shares........................................... 11
Section 10. Common Share Record Date......................... 13
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of Rights........... 13
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares.............................. 19
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power....................... 19
Section 14. Additional Covenants............................. 22
Section 15. Fractional Rights and Fractional Shares.......... 23
Section 16. Rights of Action................................. 24
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Page
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Section 17. Agreement of Rights Holders...................... 24
Section 18. Right Certificate Holder Not Deemed a Stockholder 25
Section 19. Concerning the Rights Agent...................... 25
Section 20. Merger or Consolidation or Change of
Name of Rights Agent............................. 26
Section 21. Duties of Rights Agent........................... 26
Section 22. Change of Rights Agent........................... 28
Section 23. Issuance of New Rights Certificates.............. 29
Section 24. Redemption....................................... 29
Section 25. Exchange......................................... 30
Section 26. Notice of Certain Events......................... 31
Section 27. Notices.......................................... 32
Section 28. Supplements and Amendments....................... 33
Section 29. Successors....................................... 33
Section 30. Determinations and Actions by the Board of
Directors, etc. ................................. 34
Section 31. Benefits of this Agreement....................... 34
Section 32. Severability..................................... 34
Section 33. Governing Law.................................... 34
Section 34. Counterparts..................................... 34
Section 35. Descriptive Headings............................. 35
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SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
Exhibit A -- Form of Right Certificate........................ A-1
Exhibit B -- Form of Summary of Rights........................ B-1
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RIGHTS AGREEMENT
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RIGHTS AGREEMENT, dated as of April 23, 1999 (the "Agreement"),
between Emons Transportation Group, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York corporation
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as such term is hereinafter defined) for each share of
common stock, par value $.01 per share, of the Company (the "Common Shares")
outstanding as of the close of business on May 10, 1999 (the "Record Date"), and
has authorized the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earlier of the
Distribution Date, the Redemption Date, the Exchange Date and the Final
Expiration Date (as such terms are hereinafter defined), each Right representing
the right to purchase one Common Share, upon the terms and subject to the
conditions hereinafter set forth (the "Rights").
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more
of the Common Shares then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary (as such term is hereinafter defined) of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan or (iv) IBJ
Whitehall Bank & Trust Company, in its capacity as escrow agent, acting for
and on behalf of certain holders of claims and interests in Emons
Industries, Inc., a direct wholly-owned subsidiary of the Company
("Industries") pursuant to the Second Amended and Restated Joint Plan of
Reorganization of Industries and ET Railcar Corporation dated November 10,
1986. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" solely as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% of
the Common Shares then outstanding; provided, however, that if a Person
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becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share acquisitions by the Company and shall, after
such share acquisitions, become the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed to be an "Acquiring
Person".
(b) "Affiliate," "Associate" and "control" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
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the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon the exercise
of Rights at any time prior to the occurrence of any event
described in Section 11(a)(ii) hereof or clause (x), (y) or (z)
of Section 13(a) hereof or (C) securities issuable upon exercise
of Rights from and after the occurrence of any event described in
clause (B) of this proviso which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to
the Distribution Date (as such term is hereinafter defined) or
pursuant to Section 3(a) or Section 23 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with
an adjustment made with respect to any Original Rights;
(iii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
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deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (iii) as a result of an
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (1) arises solely
from a revocable proxy given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange
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Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering
of securities) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso
to subparagraph (iii) of this paragraph (c)) or disposing of any
securities of the Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York, or
Commonwealth of Pennsylvania are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is
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not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Shares" when used with reference to the Company (or
without express reference to another Person) shall mean the shares of
common stock, par value $.01 per share, of the Company or any other shares
of capital stock of the Company into which the Common Shares are
reclassified or changed. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock or other equity
securities or equity or other beneficial interests of such Person with the
greatest aggregate voting power.
(g) "Common Stock Equivalent" shall mean a share, or fraction of
a share, of any authorized class of preferred stock of the Company having
dividend, voting, liquidation and other rights which result, in the
judgment of the Board of Directors, in such share, or fraction of a share,
being approximately equivalent in value to one Common Share as of the Event
Date (as such term is hereinafter defined); provided, however, that, for so
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long as any shares of the Company's $.14 Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Stock") are issued and
outstanding, in no event shall any preferred stock of the Company be issued
as a Common Stock Equivalent if such preferred stock would have dividend
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rights ranking senior to or pari passu with the Series A Preferred Stock or
a liquidation preference ranking senior to the Series A Preferred Stock;
and provided, further, that if in the judgment of the Board of Directors
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there are not sufficient authorized but unissued shares of preferred stock
available for the creation of Common Stock Equivalents, "Common Stock
Equivalent" shall mean such cash, reduction in Purchase Price (as such term
is hereinafter defined), other equity securities, debt securities, other
assets or any combination of the foregoing, that the Board of Directors
shall determine to be approximately equivalent in value to one Common Share
as of the Event Date. As used herein, "Event Date" shall mean (i) for
purposes of any determination made pursuant to Section 11(a)(iii) hereof,
the date of occurrence of the event described in Section 11(a)(ii) hereof
and (ii) for purposes of any determination made pursuant to Section 25(c)
hereof, the Exchange Date (as such term is hereinafter defined).
(h) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(i) "Exchange" shall have the meaning set forth in Section 25
hereof.
(j) "Exchange Date" shall have the meaning set forth in Section
7(a) hereof.
(k) "Exchange Ratio" shall have the meaning set forth in Section
25 hereof.
(l) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor by merger or
otherwise of such Person.
(n) "Preferred Shares" shall have the meaning set forth in
Section 9(a) hereof.
(o) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(p) "Purchase Price" shall have the meaning set forth in Section
4 hereof.
(q) "Record Date" shall have the meaning set forth in the recital
of this Agreement.
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(r) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 24(a) hereof.
(t) "Registered Common Shares" shall have the meaning set forth
in Section 13(b) hereof.
(u) "Right Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(v) "Rights" shall have the meaning set forth in the recital of
this Agreement.
(w) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(x) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(y) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity or other beneficial interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by
such Person.
(z) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(aa) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
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the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates.
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(a) Until the earlier of (i) the close of business on the tenth
business day after the Share Acquisition Date or (ii) the close of business
on the tenth business day (or such later day as may be determined by action
of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date that a tender
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or exchange offer by any Person is first published, sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person would be an
Acquiring Person (the earlier of such dates, including any such date which
is after the date of this Agreement and prior to the issuance of the
Rights, being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Shares registered in the
names of the holders of the Common Shares (which certificates for Common
Shares shall also be deemed to be certificates for Rights) and not by
separate Certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares. As soon as
practicable after the Distribution Date, the Rights Agent will send, by
first-class, postage prepaid mail, to each record holder of Common Shares
as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right
certificates, in substantially the form of Exhibit A hereto (the "Right
Certificates"), evidencing one Right for each Common Share so held, subject
to adjustment as provided herein. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As promptly as practicable after the Record Date, the Company
will send a copy of a Summary of Rights in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for Common Shares together with a
copy of the Summary of Rights, and the registered holders of Common Shares
shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date (or the earliest of the Redemption Date,
Exchange Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
(c) Rights shall be issued in respect of all Common Shares which
become outstanding (including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption
Date, the Exchange Date or the Final Expiration Date. Certificates
representing such Common Shares shall also be deemed to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Emons
Transportation Group, Inc. (the "Company") and
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American Stock Transfer & Trust Company, dated as of April 23,
1999 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request therefor. As
described in the Rights Agreement, Rights beneficially owned by
(i) an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) under certain circumstances, a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee before or concurrently with the
Acquiring Person becoming such, shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or the
Final Expiration Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone and the
registered holders of Common Shares shall also be the holders of the associated
Rights, and the surrender for transfer of any such certificates shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and
--------------------------
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 23 hereof, the Right
Certificates, whenever distributed shall entitle the holders thereof to purchase
such number of Common Shares as shall be set forth therein at the price per
share set forth therein (the "Purchase Price"), but the number of such shares
and the Purchase Price shall be subject to adjustment as provided herein.
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Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman or Vice Chairman of the Board, its President or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Right Certificates shall at any time cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates, the Certificate Number of each such Right
Certificate and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Section 7(e) and Section 15
hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earliest of the Redemption
Date, the Exchange Date or the Final Expiration Date, any Right Certificate
or Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Common Shares as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange
any Right Certificate shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Certificates until the registered holder
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shall have completed and signed the certificate contained in the form of
assignment set forth on the reverse side of each such Right Certificate and
shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 7(e) and Section 15 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will execute and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
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Rights.
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(a) The Rights shall not be exercisable prior to the Distribution
Date. The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office or
offices of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each Common Share as to which the Rights
are exercised, at or prior to the earliest of (i) the close of business on
May 10, 2009 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 24 hereof (the "Redemption
Date"), or (iii) the time at which the Rights are exchanged as provided in
Section 25 hereof (the "Exchange Date").
(b) The Purchase Price for each Common Share pursuant to the
exercise of a Right shall initially be $10.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased as set forth
below and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section
9(e) hereof, the Rights Agent shall, subject to
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Section 21(j) hereof, thereupon promptly (i) requisition from any transfer
agent of the Common Shares (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the number of Common
Shares to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance of
fractional shares in accordance with Section 15 hereof, (iii) after receipt
of such certificates, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such name
or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Right Certificate. The payment of the Purchase Price may be
made in cash or by certified or bank official check or money order payable
to the order of the Company. In the event that the Company is obligated to
issue other securities of the Company pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities
are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of any of the events described in Section
11(a)(ii) hereof, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. No Right Certificate shall be
issued pursuant to Section 3 hereof that represents Rights beneficially
owned by an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof and no Right
Certificate shall be issued at any time upon the transfer of any Rights to
an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate. Any Right
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Certificate delivered to the Rights Agent for transfer to any of the
foregoing Persons, or which represents void Rights, shall be canceled. The
Company shall use reasonable efforts to effect compliance with the
provisions of this Section 7(e), but shall have no liability to any holder
of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported transfer as set forth in Section 6 hereof or exercise as set
forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of assignment or
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such assignment or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
---------------------------------------------
(a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of its authorized
and unissued Common Shares and/or any authorized and issued Common Shares
held in its treasury and/or its authorized and unissued shares of preferred
stock, par value $.01 per share ("Preferred Shares"), the number of Common
Shares or Common Stock Equivalents that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the Common Shares issuable upon the exercise of
Rights may be listed on NASDAQ or any other national securities exchange,
the Company shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all Common Shares reserved for such
issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
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(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the first occurrence of an event described in
Section 11(a)(ii) hereof on which the consideration to be delivered by the
Company has been determined in accordance with Section 11(a)(ii) or
(a)(iii) hereof, as the case may be, a registration statement under the
Securities Act with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement
to become effective as soon as practicable after such filing, and (iii)
subject to Section 25 hereof, cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for such securities and (B) the Final Expiration
Date. The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, but prior to the
occurrence of the event described in Section 11(a)(ii) hereof, the Company
may temporarily suspend the exercisability of the Rights until such time as
a registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or
delivery of the Right Certificates and of any certificates for Common
Shares or other securities upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a person other
than, or the issuance or delivery of the Common Shares or other securities
in a name other than that of, the registered holder of the Right
Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for Common Shares or
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other securities in a name other than that of the registered holder upon
the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Common Share Record Date. Each person in whose name any
------------------------
certificate for Common Shares or other securities is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Common Shares or other securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
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surrender and payment is a date upon which the transfer books of the Company
with respect to the Common Shares are closed, such person shall be deemed to
have become the record holder of such Common Shares or other securities on, and
such certificate shall be dated, the next succeeding Business Day on which the
transfer books of the Company for the Common Shares are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
-------------------------------------------------------
or Number of Rights. The Purchase Price, the number and kind of shares covered
-------------------
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall, at any time after the date
of this Agreement, (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares into a greater
number of shares, (C) combine the outstanding Common Shares into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind
of Common Shares or shares of capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the aggregate
number and kind of Common Shares or shares of capital stock, as the case
may be, which, if such Right had been exercised immediately prior to such
date and at a time when the transfer books of the Company for the Common
Shares were open, he would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification.
(ii) Subject to Sections 11(a)(iii) and 25 hereof, in the event
that any Person shall become an Acquiring Person, then proper provision
shall be made so that each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter
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have a right to receive, upon exercise thereof at a price equal to the
then-current Purchase Price multiplied by the number of Common Shares for
which a Right is then exercisable, in accordance with the terms of this
Agreement such number of Common Shares as shall equal the result obtained
by (x) multiplying the then-current Purchase Price by the number of Common
Shares for which a Right is then exercisable and (y) dividing that product
by 50% of the current market price (determined pursuant to Section 11(d)(i)
hereof) per Common Share on the date such Person became an Acquiring
Person.
(iii) Subject to Section 25 hereof, in the event that the number
of Common Shares which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Rights shall not be exercisable for Common Shares,
but proper provision shall be made so that each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof in accordance with the terms of this
Agreement at the price determined pursuant to subparagraph (ii), such
number of Common Stock Equivalents (or, in the judgment of the Board of
Directors, such combination of Common Stock Equivalents and Common Shares)
as shall equal the number of Common Shares determined pursuant to
subparagraph (ii).
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Shares entitling
them to subscribe for or purchase (for a period expiring within 45 calendar
days after such record date) Common Shares or securities convertible into
Common Shares at a price per Common Share (or having a conversion price per
Common Share, if a security convertible into Common Shares) less than the
"market price" on the date of issuance of the rights, options or warrants
per Common Share on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Common Shares outstanding on such
record date, plus the number of Common Shares which the aggregate offering
price of the total number of Common Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such market price and the denominator of which
shall be the number of Common Shares outstanding on such record date, plus
the number of additional Common Shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid for a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. Common Shares owned by or held for the account of the Company
shall not be
-14-
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed. For purposes of
any computation under this Section 11(b), the "market price" of the Common
Shares shall be equal to the "closing price" (as defined in Section 11(d)
hereof) per Common Share on the Trading Day (as defined in Section 11(d)
hereof) on which such rights, options or warrants are issued.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend), assets,
stock (other than a dividend payable in Common Shares) or subscription
rights, options or warrants (excluding those referred to in or excluded
pursuant to Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the market price (as determined pursuant to Section 11(b)
hereof) per Common Share on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes) of the portion of the cash,
assets, stock or evidences of indebtedness so to be distributed or of such
subscription rights, options or warrants applicable to one Common Share and
the denominator of which shall be such market price (as determined pursuant
to Section 11(b) hereof) per one Common Share. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) For the purposes of certain computations hereunder, the
"current market price" per Common Share on any date shall be deemed to be
the average of the daily closing prices per Common Share for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current
-------- -------
market price per Common Share is determined during a period following the
announcement by the issuer of such Common Shares of (i) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than Rights) or (ii)
any subdivision, combination or reclassification of such Common Shares and
prior to the expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into account ex-
dividend trading. The "closing price" for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
-15-
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Common Shares are
listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use
including, without limitation, the over-the-counter market, or, if on any
such date the Common Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used and shall be conclusive for all purposes. The term "Trading Day"
shall mean a day on which the principal national securities exchange on
which the Common Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed or admitted
to trading on any national securities exchange, a Business Day. If the
Common Shares are not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or other security, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii) the date
of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Common Shares, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in this
-16-
Section 11 and the provisions of Sections 6, 7, 9, 10, 13 and 15 with
respect to the Common Shares shall apply on like terms to any such other
securities.
(g) All Rights issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right to purchase,
at the adjusted Purchase Price, the number of Common Shares purchasable
from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of Common Shares (calculated to the nearest ten-thousandth)
obtained by (i) multiplying (x) the number of Common Shares covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for
any adjustment in the number of Common Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment in the
number of Rights shall be exercisable for the number of Common Shares for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time,
the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement.
(j) If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(j), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing,
subject to Section 15 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required
-17-
by the Company, new Right Certificates evidencing all the Rights to which
such holder shall be entitled after such adjustment. Right Certificates so
to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(k) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
(l) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(m) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the Common
Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
-------- -------
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(n) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the Common
Shares, issuance wholly for cash of any of the Common Shares at less than
the current market price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or exchangeable for
Common Shares, stock dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company
to holders of its Common Shares shall not be taxable to such stockholders.
-18-
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
------
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing Common Shares) in accordance with
Section 27 hereof the Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) In the event that following the earlier of (1) the
Distribution Date and (2) the Share Acquisition Date, (x) the Company,
directly or indirectly, shall consolidate with, or merge with and into, any
other Person, and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person shall
consolidate with, or merge with and into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part of
the outstanding Common Shares shall be changed into or exchanged for stock
or other securities of any other Person (or of the Company) or cash or any
other property, or (z) the Company, directly or indirectly, shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or one or more wholly owned Subsidiaries of the Company), then,
and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price multiplied by the number of Common Shares for which a Right
is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof) in accordance with
the terms of this Agreement, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable Common Shares of the
Principal Party (as hereinafter defined), free and clear of any liens,
encumbrances and other adverse claims and not subject to any rights of call
or first refusal, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of Common Shares
for which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) hereof) and (2)
dividing that product by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per Common Share of the Principal Party
on the date of consummation of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer,
all the obligations and duties of the Company pursuant to
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this Agreement; (iii) except for purposes of Section 1(g) hereof, the term
"Company" shall thereafter be deemed to refer to such Principal Party; and
(iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights; provided,
--------
however, that, upon the subsequent occurrence of any merger, consolidation,
-------
sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary
transaction in respect of such Principal Party, each holder of a Right
(except as otherwise provided herein) shall thereupon be entitled to
receive, upon exercise of such Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder
would have been entitled to receive had he, at the time of such
transaction, owned the Common Shares of the Principal Party purchasable
upon the exercise of such Right (after giving effect to the foregoing
provisions of this Section 13(a)), and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants
and other property and (v) the provisions of Sections 11(a)(ii) and
11(a)(iii) hereof shall be of no effect following the occurrence of any
event described in clauses (x), (y) and (z) of this Section 13(a).
(b) "Principal Party" shall mean:
(i) in the case of any merger described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Company
are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the party to such
merger that survives the merger;
(ii) in the case of any consolidation described in clause
(x) or (y) of Section 13(a), any Person that directly controls,
alone or with other Persons, a corporation that is consolidating
with the Company; and
(iii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that
receives any assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that with respect to such Person (or if there is more than
-------- -------
one Person, with respect to each such Person), (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve (12) month period registered
-20-
under Section 12 of the Exchange Act ("Registered Common Shares"), or such
Person is not a corporation, and such Person is a direct or indirect Subsidiary
of another Person which has Registered Common Shares outstanding, "Principal
Party" shall refer to such other Person; (2) if the Common Shares of such Person
are not Registered Common Shares or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person but is not a direct
or indirect Subsidiary of another Person which has Registered Common Shares
outstanding, "Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such latter Persons have Registered Common Shares outstanding, "Principal Party"
shall refer to whichever of such latter Persons is the issuer of the Registered
Common Shares having the greatest aggregate current market value (determined
pursuant to Section 11(d)(i) hereof); or (4) if the Common Shares of such Person
are not Registered Common Shares or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and none of
such latter Persons have Registered Common Shares outstanding, "Principal Party"
shall refer to whichever ultimate parent entity is the entity having the
greatest net assets;
provided, further, however, that if under the foregoing provisions of this
-------- ------- -------
Section 13(b) there shall for any reason be more than one Principal Party,
"Principal Party" shall refer to whichever of such Persons is the issuer of
outstanding Registered Common Shares having the greatest aggregate current
market value (determined pursuant to Section 11(d) hereof) or, if none of such
Persons has Registered Common Shares outstanding, whichever of such Persons is
the entity having the greatest net assets.
(c) Notwithstanding anything herein to the contrary, if the
Principal Party as determined pursuant to paragraph (b) above is not a
corporation, proper provision shall be made so that such Principal Party
shall create or otherwise make available for purposes of the exercise of
the Rights in accordance with the terms of this Agreement, a type or types
of securities having a fair market value (as determined by a nationally
recognized investment banking firm selected by the Board of Directors of
the Company) equal to at least the value of the Common Shares which each
holder of a Right would have been entitled to receive if such Principal
Party had been a corporation.
(d) The Company shall not consummate any such consolidation,
merger, sale or transfer unless (1) at the time of such consummation the
Principal Party shall have a sufficient number of authorized Common Shares
which have not been issued or reserved for issuance to permit the exercise
in full of the Rights in accordance with this Section 13 and (2) prior to
such consummation the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in this Section 13 and further providing that, as soon
as practicable after the date of any consolidation,
-21-
merger or sale or transfer of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Final Expiration Date, and similarly comply with applicable state
securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
Section 14. Additional Covenants.
--------------------
(a) Except as expressly provided herein, no adjustment to the
Purchase Price, the number of Common Shares or other securities for which a
Right is exercisable or the number of Rights outstanding (except as
permitted by Section 24 or Section 25, hereof) or any similar adjustment
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Section 11(a)(ii) and Section 13 hereof, unless the terms of this Agreement
are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, following the earlier
of the Share Acquisition Date and the Distribution Date, except as
permitted by Sections 24, 25 and 28 hereof, it shall not, directly or
indirectly, take any action the purpose or effect of which is to eliminate
or otherwise diminish in any material respect the benefits intended to be
afforded by the Rights.
(c) The Company covenants and agrees that it shall not consummate
any of the transactions described in clauses (x), (y) and (z) of Section
13(a) hereof if (i) at the time of or after such consummation there would
be any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect (whether of
the Company or any other Person) or any other action taken (whether of the
Company or any other Person) the purpose or effect of which is to eliminate
or otherwise diminish in any material respect the benefits intended to be
afforded by the Rights or (ii) the stockholders of the Principal Party
shall have received, either prior to, simultaneously with, or after the
consummation of
-22-
such transaction, a distribution of Rights previously owned by the
Principal Party or any of its Affiliates and Associates.
(d) The Company further covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof unless prior thereto the Company and the Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with paragraph (c) above and further
providing that the Principal Party covenants and agrees that it shall not,
directly or indirectly, take any action the purpose or effect of which is
to eliminate or otherwise diminish in any material respect the benefits
intended to be afforded by the Rights. The provisions of this paragraph
(d) and paragraph (c) above shall similarly apply to successive mergers,
consolidations, sales or other transfers.
Section 15. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 15(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices, as reported by
NASDAQ or such other system then in use including, without limitation, the
over-the-counter market or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors
of the Company shall be used and shall be conclusive for all purposes.
-23-
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute certificates
which evidence fractional Common Shares. In lieu of fractional Common
Shares, the Company may pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Common Share.
For purposes of this Section 15(b), the current market value of a Common
Share shall be the closing price of a Common Share (as determined pursuant
to the second sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional share upon exercise of a Right.
Section 16. Rights of Action. All rights of action in respect of
----------------
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 17. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered
-24-
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence
of Section 7(e) hereof, shall be required to be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however,
-------- -------
the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be
-25-
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including, but not limited to, lost profits).
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon
any Right Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, instruction,
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.
Section 20. 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 with or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at such time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at such time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all
-26-
of which the Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman or Vice Chairman of the Board, the President, a Vice
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates or be required to verify the same (except as to its
countersignature thereof), but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11 or 13 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 (except
with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares or Common Stock
Equivalents (including Preferred Shares) which may be issued pursuant to
this Agreement or any Right Certificate or as to whether any Common Shares
or Common Stock Equivalents (including Preferred Shares) will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
-27-
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman or Vice Chairman of the Board, the President, a
Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become peculiarly 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.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to any item
therein, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the
Company.
Section 22. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and, if
instructed by the Company, to each transfer agent of the Common Shares by
registered or certified mail, and, at the expense of the Company, to the holders
of the Right Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30
-28-
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other State of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having a principal office in the State of
New York, which is authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 22, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 23. 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 Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Exchange Date and the Final
Expiration Date, the Company may, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Right Certificates.
Section 24. Redemption.
----------
(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend, reclassification or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights may
be made effective at such time, on such basis and with such conditions as
the
-29-
Board of Directors in its sole discretion may establish. Without limiting
the generality of the foregoing, the Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the "current market
price," as defined in Section 11(d) hereof, of the Common Shares at the
time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of such redemption; provided, however,
-------- -------
that the failure to give or any defect in such notice shall not affect the
validity of such redemption. Within 10 days after the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all
such holders at their last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Neither the Company nor any of its Subsidiaries may redeem,
acquire or purchase for value any Rights at any time in any manner except
(i) pursuant to a redemption in accordance with Section 24 or an exchange
pursuant to Section 25 hereof or (ii) in connection with the purchase of
Common Shares prior to the Distribution Date.
Section 25. Exchange.
--------
(a) Subject to paragraph (c) of this Section 25, the Board of
Directors of the Company may, at its option, at any time after the
occurrence of the event described in Section 11(a)(ii) hereof, exchange all
but not less than all of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split,
stock dividend, reclassification or similar transaction occurring after the
date hereof (such exchange being hereinafter referred to as the "Exchange"
and such exchange ratio being hereinafter referred to as the "Exchange
Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company authorizing the Exchange and without any further action and without
any notice, the right to exercise the Rights shall terminate and the only
right thereafter of
-30-
a holder of Rights included in the Exchange shall be to receive that number
of Common Shares equal to the number of Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of the Exchange; provided, however, that the failure to give or any
-------- -------
defect in such notice shall not affect the validity of the Exchange.
Within 10 days after such action of the Board of Directors ordering the
Exchange, the Company shall mail a notice of Exchange to the Rights Agent
and the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given whether or not the holder
receives the notice. Each such notice of Exchange will state the method by
which the Exchange will be effected.
(c) In the event that the number of Common Shares which are
authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the Exchange in full, the
Exchange Ratio may, at the option of the Board of Directors of the Company,
equal one Common Stock Equivalent (in lieu of one Common Share) per Right.
Alternatively, the Board of Directors of the Company may, at its option,
determine that the Company shall (i) issue Common Shares in the Exchange to
the extent Common Shares are available and (ii) utilize Common Stock
Equivalents in the Exchange as provided above to the extent Common Shares
are not available, in which case such Common Shares shall be allocated on
such basis as the Board of Directors determines pursuant to Section 30
hereof.
(d) After aggregating all the Common Shares to which a holder of
Rights is entitled upon the Exchange, the Company shall not be required to
issue a fraction of a Common Share or to distribute a certificate which
evidences a fraction of a Common Share to such holder. In lieu of issuing
fractional shares, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional shares would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of one Common Share. For the purposes of this
paragraph (d), the current market value of one Common Share shall be the
closing price of a Common Share (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately prior to the Exchange Date.
Section 26. Notice of Certain Events.
------------------------
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to
all holders of Common Shares or to make any other distribution to all
holders of Common Shares (other than a regular quarterly cash dividend),
(ii) to offer to all holders of Common Shares rights, options or warrants
to subscribe for or to purchase any additional Common Shares at less than
the then current market price of the Common Shares or shares of stock of
any class or any other securities, rights or options, (iii) to
-31-
effect any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding Common
Shares), (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 27 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of
such stock dividend or distribution of rights, options or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the Common Shares for purposes of such
action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares, whichever shall be the
earlier.
(b) In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then (i) the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 27 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all references in
the preceding paragraph to Common Shares shall thereafter be deemed to
refer to, if appropriate, Common Stock Equivalents.
Section 27. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
courier or by facsimile transmission or mailed by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Emons Transportation Group, Inc.
00 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxx, Xxxxxxxxxxxx 00000
Attention: Secretary
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Subject to the provisions of Section 22 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any
-32-
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by courier or by facsimile transmission or mailed by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
American Stock Transfer &
Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telephone No.: (000) 000-0000
Telecopy No.:(000) 000-0000
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 28. Supplements and Amendments. Prior to the earlier of the
--------------------------
Share Acquisition Date and the Distribution Date, and subject to the last
sentence of this Section 28, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement whether
or not adverse to the holders of Rights, without any approval of the holders of
Rights. From and after the earlier of the Share Acquisition Date and the
Distribution Date and subject to the last sentence of this Section 28, the
Company and the Rights Agent may from time to time supplement or amend this
Agreement without any approval of the holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to extend the period during which the Rights may be redeemed or (iv) to
change or supplement the provisions herein to effectuate the purposes of this
Agreement, or to make any other provisions with respect to the Rights, which, in
either such case, shall not materially adversely affect the interests of the
holders of Rights (other than Acquiring Persons and Affiliates or Associates
thereof). Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 28, the Rights Agent shall execute such
supplement or amendment; provided, however, that the Rights Agent may, but shall
-------- -------
not be obligated to, enter into any such supplement or amendment which affects
the Rights Agent's own rights, duties or immunities under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which decreases the Redemption Price.
Section 29. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
-33-
Section 30. Determinations 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 (including a determination to redeem or not
to redeem the Rights pursuant to Section 24 hereof, to exchange or not to
exchange the Rights pursuant to Section 25 hereof or to supplement or amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purpose of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, 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 to any liability
to the holders of the Rights.
Section 31. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 32. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
-------- -------
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 24 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 33. Governing Law. This Agreement (other than with respect
-------------
to the rights and obligations of the Rights Agent which shall be governed by the
laws of the State of New York) and each Right Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such
State.
Section 34. 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.
-34-
Section 35. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the date and year first above written.
ATTEST: EMONS TRANSPORTATION GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxxxx
---------------------------- ----------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President and Title: Chairman and President
Chief Financial Officer,
Controller and Secretary
ATTEST: AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------------- ----------------------------
Name: Xxxxx Xxxxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Vice President Title: Vice President
-35-
Exhibit A
---------
[Form of Right Certificate]
Certificate No. R- _______________ Rights
NOT EXERCISABLE AFTER MAY 10, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY
OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE OF AN
ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BECOME NULL AND VOID.
A-1
Right Certificate
[ISSUER]
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April 23, 1999 (the "Rights Agreement"), between Emons
Transportation Group, Inc., a Delaware corporation (the "Company"), and American
Stock Transfer & Trust Company (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (New York City time) on May 10, 2009 at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one fully paid, non-assessable share of the Common
Stock (the "Common Shares") of the Company, at a purchase price of $10.00 per
Common Share (the "Purchase Price"), subject to adjustment upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
The Purchase Price shall be paid in cash. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
Common Share set forth above, are the number and Purchase Price as of May 10,
1999, based on the Common Shares as constituted at such date.
From and after the occurrence of any of the events described in
Section 11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate thereof (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances, a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee before or concurrently with the
Acquiring Person becoming such, such Rights shall become void, and any holder of
such Rights shall thereafter have no right to exercise such Rights.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Common Shares or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and are also available upon written request to the Company.
A-2
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Common Shares (or Common Stock Equivalents)
as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.001 per Right or (ii) may be exchanged by the Company
at its option for Common Shares of the Company (or, in certain circumstances,
Common Stock Equivalents (as such term is defined in the Rights Agreement)).
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________, ____
ATTEST: EMONS TRANSPORTATION GROUP, INC.
By: ____________________________ By: ____________________________
Secretary Name:
Title:
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: _____________________________
Authorized Signature
A-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and
transfers unto__________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________, ____
__________________________________
Signature
Signature Guaranteed:
A-5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the Rights evidenced by this Rights Certificate [ ] are [ ] are not being
sold, assigned and transferred to a Person who is an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or a nominee of any such Acquiring
Person, Associate or Affiliate;
(3) after due inquiry and to the best knowledge of the undersigned,
[ ] it did [ ] it did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, ____
---------------------------------
Signature
A-6
NOTICE
------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
TO EMONS TRANSPORTATION GROUP, INC.:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name and delivered to:
Please insert social security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, ____
__________________________________
Signature
Signature Guaranteed:
A-8
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
[ ] it did [ ] it did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, ____
__________________________________
Signature
A-9
NOTICE
------
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
A-10
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On April 23, 1999, the Board of Directors of Emons Transportation
Group, Inc. (the "Company") declared a dividend distribution of one Right for
each outstanding share of common stock, par value $.01 per share (the "Common
Shares"), of the Company to stockholders of record on May 10, 1999 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
one Common Share at a price of $10.00 per share (the "Purchase Price"), subject
to adjustment. The Purchase Price shall be paid in cash. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and American Stock Transfer & Trust Company, as Rights
Agent.
Initially, the Rights will be attached to all Common Share
certificates representing Common Shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 business
days following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person"), or (ii) 10 business days (or such later day as may be determined by
action of the Board of Directors prior to such time as any person or group
becomes an Acquiring Person) following the commencement of a tender offer or
exchange offer if, upon consummation thereof, any person or group would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share certificate
together with a copy of this Summary of Rights. The date of announcement of the
existence of an Acquiring Person referred to in clause (i) above is hereinafter
referred to as the "Share Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, with or without a copy of this Summary of
Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares on the Distribution Date and, thereafter, such separate Right
Certificates alone will evidence the Rights.
B-1
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 10, 2009, unless earlier redeemed or
exchanged by the Company as described below.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is defined
in the Rights Agreement which may, at the option of the Company's Board of
Directors, be shares or fractional shares of the Company's preferred stock, par
value $.01 per share)) having a value equal to two (2) times the exercise price
of the Right. Upon the occurrence of the event described in the preceding
sentence, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate (as such terms are defined in the Rights Agreement) of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose of effect the avoidance of the Rights Agreement,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of the Rights Agreement or otherwise.
At any time after the occurrence of the event described in the first
sentence of the preceding paragraph, the Board of Directors of the Company may
exchange the Rights (except Rights which previously have been voided as
described above), in whole, but not in part, at an exchange ratio of one Common
Share (or, in certain circumstances, one Common Stock Equivalent) per Right.
In the event that following the earlier of the Distribution Date and
the Share Acquisition Date, (i) the Company engages in a merger or other
business combination transaction in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or other business combination
transaction with another person in which the Company is the surviving
corporation, but in which its Common Shares are changed or exchanged, or (iii)
more than 50% of the Company's assets or earning power is sold or transferred,
the Rights Agreement provides that proper provision shall be made so that each
holder of a Right shall thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, common stock of the
acquiring company having a value equal to two (2) times the exercise price of
the Right.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to
B-2
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Shares, (ii) upon the grant to
all holders of the Common Shares of certain rights, options or warrants to
subscribe for Common Shares or convertible securities at less than the current
market price of the Common Shares, or (iii) upon the distribution to holders of
the Common Shares of evidences of indebtedness, stock (other than a dividend
payable in Common Shares), assets or cash (excluding regular quarterly cash
dividends) or of subscription rights, options or warrants (other than those
referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, considerations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued upon the
exercise of any Right or Rights. In lieu of fractions of a share, a cash
payment will be made as provided in the Rights Agreement.
At any time prior to such time as any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right, subject to adjustment (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Distribution Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person) and provided that no amendment shall be made which decreases
the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement will be available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-3
