EXHIBIT 1
EXECUTION COPY
ADMINISTAFF, INC.
AND
MELLON INVESTOR SERVICES LLC, AS RIGHTS AGENT
AMENDED AND RESTATED RIGHTS AGREEMENT
EFFECTIVE AS OF APRIL 19, 2003
TABLE OF CONTENTS
Section 1. Certain Definitions.............................................................................2
Section 2. Appointment of Rights Agent.....................................................................5
Section 3. Issue of Right Certificates.....................................................................5
Section 4. Form of Right Certificates......................................................................6
Section 5. Countersignature and Registration...............................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates....................................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................7
Section 8. Cancellation and Destruction of Right Certificates..............................................8
Section 9. Availability of Preferred Shares................................................................8
Section 10. Preferred Shares Record Date....................................................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..............................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................15
Section 14. Fractional Rights and Fractional Shares........................................................17
Section 15. Rights of Action...............................................................................18
Section 16. Agreement of Right Holders.....................................................................19
Section 17. Right Certificate Holder Not Deemed a Stockholder..............................................19
Section 18. Concerning the Rights Agent....................................................................19
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................20
Section 20. Duties of Rights Agent.........................................................................20
Section 21. Change of Rights Agent.........................................................................22
Section 22. Issuance of New Right Certificates.............................................................22
Section 23. Redemption.....................................................................................22
Section 24. Exchange.......................................................................................23
Section 25. Notice of Certain Events.......................................................................24
Section 26. Notices........................................................................................24
Section 27. Supplements and Amendments.....................................................................25
Section 28. Successors.....................................................................................25
Section 29. Benefits of this Agreement.....................................................................25
Section 30. Determination and Actions by the Board of Directors............................................26
Section 31. Severability...................................................................................26
Section 32. Governing Law..................................................................................26
Section 33. Counterparts...................................................................................26
Section 34. Descriptive Headings...........................................................................26
-i-
AMENDED AND RESTATED
RIGHTS AGREEMENT
This Amended and Restated
Rights Agreement, effective as of April 19,
2003 ("Agreement"), between Administaff, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company, as rights agent (the "Rights Agent").
RECITALS:
WHEREAS, at a meeting of the Board of Directors of the Company duly
called and held on January 20, 1998, at which a quorum was present and acting
throughout, such Board of Directors authorized and declared a dividend of one
preferred share purchase right (a "Right") for each share of Common Stock (as
such term is hereinafter defined) of the Company outstanding on February 9, 1998
(the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share, upon the terms and subject to the conditions
set forth in a
Rights Agreement, dated February 4, 1998, between the Company and
Xxxxxx Trust Savings Bank, as rights agent (the "Original
Rights Agreement"),
and the Board of Directors of the Company further authorized and directed the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined); and
WHEREAS, in October 2000, the Company effected a 2-for-1 stock split of
the then outstanding Common Stock of the Company, effected by means of a stock
dividend (the "Stock Split"); and
WHEREAS, pursuant to the terms of the Original
Rights Agreement, as a
consequence of the Stock Split, the number of Rights associated with each share
of Common Stock was adjusted to be one-half of one Right for each share of
Common Stock then outstanding or that shall become outstanding between the
Record Date and the Final Expiration Date; and
WHEREAS, Section 27 of the Original
Rights Agreement provides that the
Company may in its sole discretion, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of the Original
Rights Agreement in
any respect without the approval of the holders of the Rights; and
WHEREAS, subsequent to the execution of the Original
Rights Agreement
the Board of Directors of the Company adopted Amendment Nos. 1, 2, 3 and 4 to
the Original
Rights Agreement, all of which amendments modified the definition
of "Exempt Person;" and
WHEREAS, subsequent to the adoption of Amendment Nos. 1, 2, 3 and 4,
facts relating to the stock ownership of certain persons heretofore classified
in the amendments as "Exempt Persons" have changed so that the exemption
afforded by such classification is no longer applicable; and
WHEREAS, Section 21 of the Original Rights Agreement provides that the
Company may, with written notice, remove any rights agent and appoint a
successor rights agent; and
WHEREAS, the Board of Directors of the Company desires to remove Xxxxxx
Trust and Savings Bank as rights agent and appoint Mellon Investor Services LLC
as successor Rights Agent; and
WHEREAS, in connection with the appointment of the successor Rights
Agent, the Board of Directors of the Company desires to further amend and
restate the Original Rights Agreement in its entirety to amend the definition of
"Exempt Person, " to reflect the appointment of the successor Rights Agent and
to restate and integrate the provisions of the existing Original Rights
Agreement and all amendments thereto that are in effect on the date hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner
(as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding, but shall not include an
Exempt Person; provided, however, that if the Board of Directors
of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person" has become such inadvertently
(including, without limitation, because (i) such Person was
unaware that it beneficially owned a percentage of Common Stock
that would otherwise cause such Person to be an "Acquiring
Person" or (ii) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but was unaware of the
consequences of such Beneficial Ownership under this Agreement)
and without any intention of changing or influencing control of
the Company, and such Person, as promptly as practicable after
being advised of such determination divested or divests himself
or itself of Beneficial Ownership of a sufficient number of
shares of Common Stock so that such Person would no longer be an
Acquiring Person, then such Person shall not be deemed to be or
to have become an "Acquiring Person" for any purposes of this
Agreement. Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of an acquisition of Common
Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common
Stock of the Company then outstanding; provided, however, that if
a Person (other than an Exempt Person) shall become the
Beneficial Owner of 15% or more of the Common Stock of the
Company then outstanding by reason of the share purchases by the
Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock of the
Company, then such Person shall be deemed to be an "Acquiring
Person" unless upon the consummation of the acquisition of such
additional shares of Common Stock such Person does not own 15% or
more of the shares of Common Stock then outstanding.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act
as in effect on the date of this Agreement.
(c) "Associate" shall have the meaning ascribed to such term in Rule
l2b-2 of the General Rules and Regulations under the Exchange Act
as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (I)
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 or (II) securities which
such Person has a right to acquire upon the exercise of
Rights at any time prior to the time a Person becomes an
Acquiring Person; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security by reason of such an
agreement, arrangement or understanding if the agreement,
arrangement or understanding to vote
2
such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations promulgated
under the Exchange Act (as such term is hereinafter
defined) and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person 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 to the extent contemplated by the proviso to
Section 1(d)(ii)(B)) or disposing of any securities of the
Company. Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and
outstanding together with the number of such securities not
then issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of
Texas or the State of New Jersey are authorized or obligated by
law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Houston, Texas time, on such date; provided, however, that, if
such date is not a Business Day, it shall mean 5:00 P.M.,
Houston, Texas time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the shares of common stock, par value $0.01 per share, of the
Company. "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock (or, in the
case of an unincorporated entity, the equivalent equity interest)
with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(h) "Common Stock equivalent" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Company" shall have the meaning set forth in the preamble
hereof.
(j) "current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(m) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(p) "Exempt Person" shall mean:
(i) the Company or any Subsidiary (as such term is hereinafter
defined) of the Company or any employee benefit plan of the
Company's;
3
(ii) Xxxx X. Xxxxxxx, his spouse, lineal descendants, heirs,
executors or other legal representatives and any trusts or
limited partnerships established for the benefit of the
foregoing, or any other person or entity in which the
foregoing persons or entities are at the time of
determination the direct record and beneficial owners of
all outstanding voting securities (collectively, the
"Xxxxxxx Stockholders"), provided that the Xxxxxxx
Stockholders shall cease to be an Exempt Person if the
Beneficial Ownership of the Xxxxxxx Stockholders exceeds
17% (the "Xxxxxxx Threshold");
Notwithstanding the foregoing, no Person shall cease to be
an Exempt Person as the result of an acquisition of Common
Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of
shares beneficially owned by such Person. As used in clause
(iii) of this definition, the term "Fully Diluted Basis"
means the sum, without duplication, of (i) all shares of
Common Stock then outstanding (as such term is used in the
definition of Beneficial Ownership in Section 1(d) hereof),
(ii) shares of Common Stock issuable upon the exercise of
all outstanding warrants, options and other rights to
acquire Common Stock, directly or indirectly, and (iii)
Common Stock issuable upon conversion of all securities
convertible, directly or indirectly, into Common Stock.
(q) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(r) "Nasdaq" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(s) "NYSE" shall mean the
New York Stock Exchange, Inc.
(t) "Person" shall mean any individual, firm, corporation, limited
liability company, partnership, limited partnership or other
entity, and shall include any successor (by merger or otherwise)
of such entity.
(u) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the
Company having the rights and preferences set forth in the Form
of Certificate of Designations attached to this Agreement as
Exhibit A.
(v) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(w) "Record Date" shall have the meaning set forth in the second
paragraph hereof.
(x) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(y) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(z) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(aa) "Right" shall have the meaning set forth in the second paragraph
hereof.
(bb) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(cc) "Section 11(a)(iii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(dd) "Security" shall have the meaning set forth in Section 11(d)
hereof.
(ee) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
4
(ff) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(gg) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person.
(hh) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ii) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(jj) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any co-Rights Agent.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the tenth day after the Stock Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person of, or of the first public
announcement of the intention of any Person to commence, a tender or exchange
offer the consummation of which would result in any Person becoming an Acquiring
Person (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Stock registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection with
the transfer of Common Stock. As soon as practicable after the Distribution
Date, the Company will promptly notify the Rights Agent thereof, and prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested and provided with all
necessary information, at the expense of the Company, send) by first-class,
insured, postage prepaid mail, to each record holder of Common Stock as of the
close of business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each share of
Common Stock so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common Stock as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Stock
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 Stock represented thereby.
(c) Certificates for Common Stock which become outstanding (including,
without limitation, reacquired Common Stock referred to in the last sentence of
this paragraph (c) that are subsequently issued or distributed by the Company)
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
5
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights
Agreement between Administaff, Inc. and the Rights Agent (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 Administaff, Inc.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed or be evidenced by
separate certificates and no longer be evidenced by this
certificate. Administaff, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights Agreement,
Rights owned by or transferred to any Person who becomes an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), and certain
transferees thereof, will become null and void and will no
longer be transferable.
With respect to such certificate containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby. In
the event that the Company purchases or acquires any Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Stock which are no
longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, immunities, duties or responsibilities of the Rights
Agent) and as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11, 13 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein, but the number of
such one one-hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, 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
Certificates although at the date of the execution of this Rights 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 its office designated for such purpose, 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 and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption
6
Date or the Final Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the registered holder
to purchase a like number of one one-hundredths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate until the registered
holder shall have duly and properly completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request. Thereupon,
the Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. The Rights Agent shall have
no duty or obligation under any Section of this Agreement which requires the
payment by a Rights holder of applicable taxes and governmental charges unless
and until it is satisfied that all such taxes and/or charges have been paid.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the close of business on the earlier of
the Redemption Date and the Final Expiration Date, 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 satisfactory to them, and, at the
Company's or the Rights Agent's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) 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 office of the Rights Agent designated
for such purpose, together with payment of the Purchase Price for each one
one-hundredth of a Preferred Share as to which the Rights are exercised, at or
prior to the earliest of (i) the Close of Business on February 8, 2008 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date") and (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $125.00, and
shall be subject to adjustment from time to time as provided in Section 11 or 13
hereof (the "Purchase Price") and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) of this Section 7.
(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 and an amount equal
to any applicable tax or charge required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when necessary to comply with this Agreement,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof; (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the
7
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder; and (iv) when necessary to comply with this
Agreement, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) Except as otherwise provided herein, 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 to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Sections 6 and 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or 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 Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) 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. Availability of Preferred Shares. (a) The Company covenants
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(b) So long as the shares of Preferred Stock (and, following the time
that a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on the NYSE or listed on any other national securities exchange or
quotation system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on the NYSE or listed on any other
exchange or quotation system upon official notice of issuance upon such
exercise.
(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person, shares of Common Stock
and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act 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 (with a copy
of such announcement to the Rights Agent). Notwithstanding any
8
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the Securities
Act (if required) shall have been declared effective.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or charge that may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise of
any Rights until any such tax or charge shall have been paid (any such tax or
charge being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax or charge is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or other securities
or property covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Share transfer
books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.
(ii) Subject to Sections 23 and 24 of this Agreement, in the
event any Person becomes an Acquiring Person, then (A) the
Purchase Price shall be adjusted to be the Purchase Price in
effect immediately prior to such Person becoming an Acquiring
Person multiplied by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately
prior to such Person becoming an Acquiring Person, whether or
not such Right was then exercisable, and (B) each holder of a
Right, except as otherwise provided in this Section 11(a)(ii)
and Subsection 11(a)(iii) hereof, shall thereafter have the
right to receive, upon exercise at a price equal to the
9
Purchase Price (as so adjusted), in accordance with the terms
of this Agreement and in lieu of Preferred Shares, such number
of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price
of the Company's Common Stock (determined pursuant to Section
11(d) hereof) on the date such Person became an Acquiring
Person; provided, however, that the Purchase Price and the
number of shares of Common Stock so receivable upon exercise
of a Right shall thereafter be subject to further adjustment
as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Agreement to the contrary,
however, from and after the time (the "invalidation time")
when any Person first becomes an Acquiring Person, any Rights
that are beneficially owned by (x) any Acquiring Person (or
any Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the invalidation
time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or
concurrently with the invalidation time pursuant to either (I)
a transfer from the Acquiring Person to holders of its equity
securities or to any person with whom it has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of
Directors has determined is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of
such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of
this Agreement. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are
complied with, 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. From
and after the invalidation time, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become null and void
pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents
Rights that are or have become null and void pursuant to the
provisions of this paragraph shall be cancelled. From and
after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exercised
pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii). Notwithstanding the
occurrence of an adjustment in accordance with this Section
11(a)(ii), the Rights (other than those that have been
invalidated pursuant to this Section 11(a)(ii)), shall remain
subject to redemption pursuant to Section 23 hereof on the
terms set forth herein.
(iii) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the subparagraph (ii) of this Section 11(a),
the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon
exercise of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be
necessary to authorize such additional shares of Common Stock
the Company shall, to the extent permitted by applicable law
and any material agreements then in effect to which the
Company is a party, (A) determine the excess of (1) the value
of the shares of Common Stock issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the
"Current Value") over (2) the then current Purchase Price
multiplied by the number of one one-hundredths of Preferred
Shares for which a Right was exercisable immediately prior to
the time that the Acquiring Person became such (such excess,
the "Spread"), and (B) with respect to each Right (other than
Rights which have become void pursuant to Section 11(a)(ii)),
make adequate provision to substitute for the shares of Common
Stock issuable in accordance with subparagraph (ii) upon
exercise of the Right and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Preferred Shares or other equity securities of the Company
(including, without limitation, shares or fractions of shares
of preferred stock which, by virtue of having dividend, voting
and liquidation rights substantially comparable to those of
the shares of Common Stock, are deemed in good faith by the
Board of Directors to have substantially the same value as the
shares of Common Stock (such shares of preferred stock and
shares or fractions of
10
shares of preferred stock are hereinafter referred to as
"Common Stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of
the shares of Common Stock actually issued upon exercise of
such Right, shall have an aggregate value equal to the Current
Value (less the amount of any reduction in the Purchase
Price), where such aggregate value has been determined by the
Board of Directors upon the advice of a nationally recognized
investment banking firm selected in good faith by the Board of
Directors; provided, however, that if the Company shall not
make adequate provision to deliver value pursuant to clause
(B) above within 30 days following the date that the Acquiring
Person became such (the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then
in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number of fractions
of shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If, upon the date any
Person becomes an Acquiring Person, the Board of Directors
shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights,
then, if the Board of Director so elects, the 30-day period
set forth above may be extended to the extent necessary, but
not more than 90 days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares (such 30-day
period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 11(a)(ii) hereof
and the last sentence of this Section 11(a)(iii) hereof, that
such action shall apply uniformly to all outstanding Rights
and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such
second sentence and to determine the value thereof. In the
event of 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 (with
prompt written notice of each such announcement to the Rights
Agent). For purposes of this Section 11(a)(iii), the value of
the shares of Common Stock shall be the current per share
market price (as determined pursuant to Section 11(d)(i)) on
the Section 11(a)(ii) Trigger Date and the per share or
fractional value of any "Common Stock equivalent" shall be
deemed to equal the current per share market price of the
Common Stock. The Board of Directors of the Company may, but
shall not be required to, establish procedures to allocate the
right to receive shares of Common Stock upon the exercise of
the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred
Shares 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
Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price
of the total number of Preferred Shares and/or equivalent
preferred shares so to he offered (and/or the aggregate
initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and
the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be
less than the aggregate par
11
value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price
may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Preferred Shares owned
by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or
assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b)
hereof), the 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 then current per share
market price of the Preferred Shares on such record date, less
the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred
Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days immediately
prior to such date; provided, however, that in the event that
the current per share market price of the Security is
determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to
the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination or reclassification then, and in each
such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way in either case, as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the NYSE or, if the Security is not listed or admitted to
trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed
on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by Nasdaq or such
other system then in use, or, if on any such date the Security
is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the
Board of Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange on which the security is listed or
admitted to trading on any national securities exchange, a
Business Day.
12
(ii) For the purpose of a computation hereunder, the "current
per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall
be conclusively deemed to be the current per share market
price of the Common Stock as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof), multiplied by 100. If neither the Common Stock nor
the Preferred Shares is publicly held or so listed or traded,
"current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one ten-thousandth of a Preferred Share or one
ten-thousandth of any other share or security as the case may
be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the
transaction which require such adjustment and (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) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock
of the Company other than Preferred Shares, 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 Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the
number of one one-hundredths of a Preferred Share purchasable
from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one ten-thousandth of a Preferred
Share) obtained by (A) multiplying (x) the number of one
one-hundredths of a share 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
(B) 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 one
one-hundredths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for
the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one 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 and shall promptly give the Rights Agent
a copy of such announcement. This record date may be the date
13
on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, such record
date shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause
to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall he
entitled after such adjustment. Right Certificates to be so
distributed shall be issued, executed and countersigned in the
manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the
then par value, if any, of the Preferred Shares or other
shares of capital stock 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
Preferred Shares or other such shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to
defer (and shall give prompt written notice of such election
to the Rights Agent) until the occurrence of such event the
issuing to the holder of any Right exercised after such record
date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
on the basis of the 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.
(m) 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 Preferred Shares,
issuance wholly for cash of any Preferred Shares at less than
the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in
Common Stock or (ii) effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or
otherwise than by payment of dividends in Common Stock) into a
greater or lesser number of shares of Common Stock, then in
any such case the Rights associated with each share of Common
Stock following any such event shall equal the result obtained
by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction,
of which the numerator shall be equal to the number of shares
of Common Stock outstanding immediately prior to the
occurrence of the event and of which the denominator shall be
equal to
14
the total number of shares of Common Stock outstanding
immediately following the occurrence of such event. The
adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Stock or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 23 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be
obligated or responsible for calculating any adjustment nor shall it be deemed
to have knowledge of such adjustment unless and until it shall have received
such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall consolidate with,
or merge with and into, any other Person, (ii) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then, and in each such case, proper provision shall be made so
that (A) each holder of a Right (other than Rights that have become void
pursuant to Section 11(a)(ii)) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of validly issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall equal the result obtained by (I)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (II) 50% of the then current per share market price of the Common
Stock of such Principal Party (determined in accordance to Section 11(d)(i)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; provided that the Purchase Price and the number of shares of Common
Stock of such Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in Section 11(f) of this Agreement to reflect any
events occurring in respect of such Principal Party after the date of such
consolidation, merger, sale or transfer; (B) 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 this Agreement; (C) the term "Company" shall thereafter be deemed to refer to
such Principal Party; and (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
shares of Common Stock in accordance with Section 9 hereof) in connection with
such 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 the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights; provided that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had such holder, at the time of such transaction, owned the Common Stock
of the Principal Party receivable upon the exercise of a Right pursuant to 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.
(b) As used in this Section 13, "Principal Party" shall mean
15
(i) in the case of any transaction described in clause (i) or (ii)
of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which the shares of
Common Stock are converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer the
shares of Common Stock of which have the greatest aggregate
market value of shares outstanding, or (B) if no securities
are so issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the shares of Common
Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other
party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it
survives) or (z) the Person resulting from the consolidation;
and
(ii) in the case of any transaction described in clause (iii) of
the first sentence in Section 13(a) hereof, the Person that is
the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest aggregate market
value of shares outstanding; provided, however, that in any
such case described in the foregoing clause (b)(i) or (b)(ii),
if the Common Stock of such Person is not at such time or has
not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if
such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly
or indirectly, of more than one Person, and the Common Stocks
of all of such persons have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is
the issuer of Common Stock having the greatest aggregate
market value of shares outstanding, or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses
(1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall
bear the obligations set forth in this Section 13 in the same
ratio as its interest in such Person bears to the total of
such interests.
(b) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the
Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be
performed in accordance with their terms and that such consolidation,
merger, sale or transfer of assets shall not result in a default by the
Principal Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a) and (b)
hereof and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such
registration statement to become effective as soon as
practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date, and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on the
New York
Stock Exchange or on another national securities exchange, to
list or admit to trading (or continue the listing of) the
Rights and the securities
16
purchasable upon exercise of the Rights on the
New York Stock
Exchange or such securities exchange, or, if the Common Stock
of the Principal Party shall not be listed or admitted to
trading on the
New York Stock Exchange or a national
securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be reported by such
other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 (or
any successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or
as a consequence of, the consummation of a transaction referred to in
this Section 13, shares of Common Stock of such Principal Party at less
than the then current market price per share thereof (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than
such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of
Section 13, then, in such event, the Company hereby agrees with each
holder of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall
have been cancelled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time after a
Person first becomes an Acquiring Person enter into any transaction of
the type contemplated by any of clauses (i) - (iii) of Section 13(a)
hereof if (x) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any rights,
warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (y) prior to,
simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates
or (z) the form or nature of organization of the Principal Party would
preclude or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case, as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Rights are not
listed or admitted to trading on the NYSE, 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
17
on any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the- counter
market, as reported by Nasdaq or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors 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.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the
Company shall 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 Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock (as determined in
accordance with Section 14(a) hereof) for the Trading Day immediately prior to
the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
(e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Corporation shall (i) promptly prepare and
deliver to the Rights Agent a certificate setting forth in reasonable detail the
facts related to such payments and the prices and/or formulas utilized in
calculating such payments, and (ii) provide sufficient monies to the Rights
Agent in the form of fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a certificate and shall have
no duty with respect to, and shall not be deemed to have knowledge of any
payment for fractional Rights or fractional shares under any section of this
Agreement relating to the payment of fractional Rights or fractional shares
unless and until the Rights Agent shall have received such a certificate and
sufficient monies.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and 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.
18
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right thus:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or agency of the Rights
Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common
Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice
to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (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, preparation, delivery, amendment 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, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense incurred without gross negligence, bad faith or willful
misconduct (each as determined by a final, non-appealable order, judgment,
decree or ruling of a court of competent jurisdiction) on the part of the Rights
Agent for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including,
without limitation, the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company, unless it is determined by a final, non-appealable order, judgment,
decree or ruling of a court of competent jurisdiction that the Rights Agent is
not entitled to indemnification due to the Rights Agent's gross negligence, bad
faith or willful misconduct. The provisions of this Section 18 and Section 20
below shall survive the termination of this Agreement, the exercise, termination
or expiration of the Rights and the resignation or removal of the Rights Agent.
(b) The Rights Agent may conclusively rely upon and shall be authorized
and protected and shall incur no liability for, or in respect of any action
taken, suffered or omitted by it in connection with, its acceptance and
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof. The Rights Agent shall not be deemed to have knowledge of any
event of which it was supposed to receive notice thereof hereunder, and the
Rights Agent shall incur no liability for failing to take any action in
connection therewith unless and until it has received such notice in writing.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Rights Agent be liable for special, indirect, incidental, punitive or
consequential loss or damage of any kind
19
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the stock transfer or corporate
trust powers of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(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 that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Agreement (and no implied
duties and obligations) upon the following terms and conditions, by all of which
the Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights
Agent, and the Rights Agent shall incur no liability for or in
respect of, any action taken, suffered or omitted by it in the
absence of bad faith and in accordance with such advice or
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior
to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the 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, suffered or omitted by it
in the absence of bad faith under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct (each as
determined by a final, non-appealable order, judgment, decree
or ruling of a court of competent jurisdiction). Any liability
of the Rights Agent under this Agreement will be limited to
the amount of fees paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
20
(e) The Rights Agent shall not be under any responsibility or have
any liability in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void in accordance with Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for
in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares to
be issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent
for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to
such officers for advice or instructions in connection with
its duties, and such instructions shall be full authorization
to the Rights Agent, and the Rights Agent shall not be liable
for any action taken, suffered or omitted by it in the absence
of bad faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date
on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five Business Days after
the date any officer of the Company actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in
response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any stockholder, Affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to
purchase set forth on the reverse thereof, as the case may be,
has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the
Rights Agent shall not take any further
21
action with respect to such requested exercise or transfer
without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if it believes that
repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in
this Agreement or the designation of any Person as an
Acquiring Person, Affiliate, Associate or Subsidiary) under
this Agreement unless and until the rights Agent shall be
specifically notified in writing by the Company of such fact,
event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred 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 Stock or Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court shall be a Person organized and doing business under the laws of
the United States, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the 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 Stock following the Distribution Date and
prior to the earlier of the Redemption Date and the Final Expiration Date, the
Company may with respect to shares of Common Stock so issued or sold pursuant to
(i) the exercise of stock options, (ii) under any employee plan or arrangement,
(iii) upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (iv) a contractual obligation of the Company
in each case existing prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to the Close of Business on the 10th business
day after the Stock Acquisition Date, redeem all but not less than
22
all the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The redemption of the Rights
by the Board of Directors of the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company, in
its sole discretion may establish. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current market
price of the Common Stock 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 pursuant to paragraph (a) of this
Section 23 (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 any such redemption and
prompt written notice to the Rights Agent; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors of the
Company ordering the redemption of the Rights, the Company shall mail a notice
of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Stock prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person first becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be empowered to effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding. From and after the occurrence of an event specified in Section
13(a) hereof, any Rights that theretofore have not been exchanged pursuant to
this Section 24(a) shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section 24(a). The exchange
of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange (with
prompt written notice thereof to the Rights Agent); provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become null and void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take all
23
such action as may be necessary to authorize such additional Common Stock, the
Company shall substitute, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock as of the date of issuance of such Preferred
Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of a share of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such shares of fractional Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this Section 24(d), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall at
any time after the earlier of the Distribution Date and the Stock Acquisition
Date propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants to subscribe for
or to purchase any additional preferred Shares or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision or combination of outstanding Preferred Shares), (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Stock), then, in each such case, the Company shall give to the Rights Agent and
to each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) or Section 13
hereof shall occur, then the Company shall as soon as practicable thereafter
give to the Rights Agent and to each holder of a Right Certificate (or if
occurring prior to the Distribution Date, the holders of the Common Stock), in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) or Section 13 hereof, as the case may
be.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by registered
or certified mail and deemed given upon receipt, addressed (until another
address is filed in writing with the Rights Agent) or by facsimile transmission
as follows:
Administaff, Inc.
00000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
24
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sent by registered or
certified mail and shall be deemed given upon receipt, and addressed (until
another address is filed in writing with the Company) or by facsimile
transmission as follows:
Mellon Investor Services LLC
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Client Service Manager
with a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile 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 27. Supplements and Amendments. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Company may
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs but subject to the other provisions of this Section, supplement or
amend any provision of this Agreement in any respect without the approval of any
holders of the Rights, including, without limitation, as long as the Rights are
then redeemable, to extend the period during which the Rights may be redeemed.
At any time when the Rights are no longer redeemable, except as otherwise
provided in this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs but subject to the other provisions of this Section,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable; provided that no such supplement or amendment
shall adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
and no such amendment may cause the rights again to become redeemable or cause
the Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which decreases the Redemption Price.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, and provided such supplement or amendment does not
change or increase the Rights Agent's rights, immunities, duties or obligations,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment that
changes or increases the rights, immunities, obligations or duties of the Rights
Agent under this Agreement will be effective against the Rights Agent without
the execution of such supplement or amendment by the Rights Agent.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
25
Section 30. Determination and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights. The Rights
Agent shall always be entitled to assume that the Company's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that all provisions
regarding the rights, duties, liabilities and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ADMINISTAFF, INC.
By: /s/ Xxxx X. Xxxxxxx, XX
--------------------------------------
Xxxx X. Xxxxxxx XX
Vice President, Legal and
General Counsel
MELLON INVESTOR SERVICES LLC
as Rights Agent
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx
Client Service Manager
27
EXHIBIT A
CERTIFICATE OF DESIGNATIONS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK OF
ADMINISTAFF, INC.
(PURSUANT TO SECTION 151 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
----------
Administaff, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was duly adopted by
the Board of Directors of the Company as required by Section 151 of the General
Corporation Law of the State of Delaware at a meeting duly called and held on
January 20, 1998:
WHEREAS, pursuant to the Company's Certificate of Incorporation, as
amended to date (hereinafter called the "Certificate of Incorporation"), the
Company is authorized to issue up to 20,000,000 shares of preferred stock, par
value $0.01 per share (the "Preferred Stock"), from time to time, none of which
are currently outstanding; and
WHEREAS, pursuant to the authority vested in the Board of Directors of
the Company in accordance with the General Corporation Law of the State of
Delaware and the Company's Certificate of Incorporation, the Board of Directors
is authorized by resolution duly adopted, to designate shares of Preferred Stock
to be issued, in one or more series, to provide for the designation thereof of
the powers, designations, preferences and relative, participating, optional or
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof;
NOW, THEREFORE BE IT RESOLVED, that pursuant to the authority granted
to and vested in the Board of Directors of the Company (hereinafter called the
"Board of Directors" or the "Board") in accordance with the provisions of the
Company's Certificate of Incorporation, the Board of Directors on January 20,
1998 adopted the following resolutions to create a new series of Preferred
Stock; and be it further
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Delaware
General Corporation Law and the Certificate of Incorporation, a Series A Junior
Participating Preferred Stock of the Corporation is hereby created, with the
designations thereof and the powers, designations, preferences and relative,
participating, optional or other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof as set forth below:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 600,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Company convertible into Series A
Preferred Stock.
A-1
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock of the Company (the "Preferred Stock") (or any similar stock)
ranking prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $0.01 per share, of the Company (the
"Common Stock") and of any other stock of the Company ranking junior to the
Series A Preferred Stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available therefor, quarterly
dividends payable in cash on the last day of January, April, July, and October
in each year (each such date being referred to herein as a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 and (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event that the
Company shall at any time after February 9, 1998 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock
shall nevertheless be payable, when, as and if declared, on such subsequent
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series A Preferred Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by- share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event the Company shall at any time after
February 9, 1998 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of
A-2
votes per share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Company having general voting
rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law or the
Certificate of Incorporation, holders of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (as to dividends) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (as to dividends) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company ranking junior
(as to dividends and upon dissolution, liquidation or winding up) to the Series
A Preferred Stock or rights, warrants or options to acquire such junior stock;
or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their retirement become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
A-3
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividend distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Series A Preferred Stock liquidation preference and the
liquidation preferences of all other classes and series of stock of the Company,
if any, that rank on a parity with the Series A Preferred Stock in respect
thereof, then the assets available for such distribution shall be distributed
ratably to the holders of the Series A Preferred Stock and the holders of such
parity shares in the proportion to their respective liquidation preferences. In
the event the Company shall at any time after February 9, 1998 declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (A) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In the case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are converted into, exchanged for or changed into
other stock or securities, cash and/or any property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly converted
into, exchanged for or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
converted, exchanged or converted. In the event the Company shall at any time
after February 9, 1998 declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the conversion,
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable from any holder.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all other series of
Preferred Stock and senior to the Common Stock.
Section 10. Amendment. If any proposed amendment to the Certificate of
Incorporation (including this Certificate of Designations) would alter, change
or repeal any of the preferences, powers or special rights given to the Series A
Preferred Stock so as to affect the Series A Preferred Stock adversely, then the
holders of the Series A Preferred Stock shall be entitled to vote separately as
a class upon such amendment, and the affirmative vote of two- thirds of the
outstanding shares of the Series A Preferred Stock, voting separately as a
class, shall be necessary for the adoption thereof, in addition to such other
vote as may be required by the General Corporation Law of the State of Delaware.
A-4
Section 11. Fractional Shares. Series A Preferred Stock may be issued
in fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its Chairman, President and Chief Executive Officer and
attested by its Secretary this ____ day of February, 1998.
-------------------------------------
Xxxx X. Xxxxxxx
President and Chief Executive Officer
A-5
EXHIBIT B
Form of Right Certificate
Certificate No. R- Rights
----------
NOT EXERCISABLE AFTER FEBRUARY 8, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Administaff, Inc.
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Amended and Restated Rights Agreement, dated as of April 19, 2003 (the
"Rights Agreement"), between Administaff, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, as rights agent (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.,
Houston, Texas time, on February 8, 2008 at the office of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one-hundredth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the
"Preferred Shares") at a purchase price of $125 (subject to adjustment as
provided in the Rights Agreement) per one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
February 9, 1998, based on the Preferred Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of
one-hundredths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office 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 Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate (i) may be redeemed by the Company at a redemption
price of $0.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $0.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but, in lieu thereof, a cash
payment will be made, as provided in the Rights Agreement.
B-1
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ______________, ______.
ADMINISTAFF, INC.
ATTEST:
Name: By
------------------------------- ---------------------------------
Title: Title:
Countersigned: MELLON INVESTOR SERVICES LLC,
as Rights Agent
By
---------------------------------
Name:
Title:
B-2
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 onto
----------------------------- ---- ---
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney,
_________________ to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, _____
Signature
----------------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
----------------------------------
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the Right
Certificate.)
To: Administaff, Inc.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security or other identifying number _____________________.
--------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number _____________________.
(Please print name and address)
Dated: ____________________, ________,
Signature
--------------------------------
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
(Form of Reverse Side of Right Certificate -- continued)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
--------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
EXHIBIT C
AMENDED SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 20, 1998, the Board of Directors of Administaff, Inc. (the
"Company") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $0.01
per share ("Common Stock"), of the Company. The distribution is payable on
February 9, 1998 (the "Record Date") to the stockholders of record on that date.
In October 2000, the Company effected a 2-for-1 split of the then outstanding
Common Stock, effected by means of a stock dividend (the "Stock Split") and, as
a result of the Stock Split, the number of Rights associated with each share of
Common Stock was adjusted to be one-half of one Right for each share of Common
Stock. Each Right entitles the registered holder thereof to purchase from the
Company one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company (the "Preferred Stock") at a
price of $125, subject to adjustment. The following is a summary of the Rights;
the full description and terms of the Rights are set forth in an Amended and
Restated Rights Agreement (the "Rights Agreement") between the Company and
Mellon Investor Services LLC, as Rights Agent (the "Rights Agent").
Copies of the Rights Agreement and the Certificate of Designation are
available free of charge from the Company. This summary description of the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Rights Agreement and
the Certificate of Designation, including the definitions therein of certain
terms, which Rights Agreement and Certificate of Designation are incorporated
herein by reference.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the Distribution Date will occur upon the earlier of (i) 10 days following the
date of public announcement that a person or group of persons has become an
Acquiring Person (as hereinafter defined) or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to the
time a person becomes an Acquiring Person) following the commencement of, or the
announcement of an intention to make, a tender offer or exchange offer upon
consummation of which the offeror would, if successful, become an Acquiring
Person (the earlier of such dates being called the "Distribution Date").
The term "Acquiring Person" means any person who or which, together
with all of its affiliates and associates, shall be the beneficial owner of 15%
or more of the outstanding Common Stock, but shall not include:
(i) the Company or any Subsidiary (as such term is hereinafter defined)
of the Company or any employee benefit plan of the Company's;
(ii) Xxxx X. Xxxxxxx, his spouse, lineal descendants, heirs, executors
or other legal representatives and any trusts or limited partnerships
established for the benefit of the foregoing, or any other person or entity in
which the foregoing persons or entities are at the time of determination the
direct record and beneficial owners of all outstanding voting securities
(collectively, the "Xxxxxxx Stockholders"), provided that the Xxxxxxx
Stockholders shall cease to be an Exempt Person if the Beneficial Ownership of
the Xxxxxxx Stockholders exceeds 17% (the "Xxxxxxx Threshold");
Notwithstanding the foregoing, no Person shall cease to be an Exempt
Person as the result of an acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding
C-1
as of the Record Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 9, 2008 (the "Expiration Date").
The Purchase Price payable, and the number of one-hundredths of a share
of Preferred Stock or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to in (ii) above).
The number of outstanding Rights and the number of one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in the Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
In the event that following a Stock Acquisition Date (the date of
public announcement that an Acquiring Person has become such) the Company is
acquired in a merger or other business combination transaction or more than 50%
of its consolidated assets or earning power are sold, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right (the "Flip-Over Right").
In the event that an Acquiring Person becomes the beneficial owner of
15% or more of the outstanding shares of Common Stock, proper provision shall be
made so that each holder of a Right (other than the Acquiring Person and its
affiliates and associates) will thereafter have the right to receive upon
exercise that number of shares of Common Stock (or, under certain circumstances,
cash, other equity securities or property of the Company) having a market value
equal to two times the Purchase Price of the Rights (the "Flip-In Right"). Upon
the occurrence of the foregoing event giving rise to the exercisability of the
Rights, any Rights that are or were at any time owned by an Acquiring Person
shall become void.
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. Upon exercise of the Rights, no fractional shares of
Preferred Stock will be issued other than fractions which are integral multiples
of one-hundredth of a share of Preferred Stock; cash will be paid in lieu of
fractional shares of Preferred Stock that are not integral multiples of
one-hundredth of a share of Preferred Stock.
At any time prior to the earlier to occur of (i) 5:00 p.m., Houston,
Texas time on the 10th day after the Stock Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"); provided, that (i)
if the Board of Directors authorizes redemption on or after the time a person
becomes an Acquiring Person, then such authorization must be by Board Approval
(as hereinafter defined) and (ii) the period for redemption may, upon Board
Approval, be extended by amending the Rights Agreement. The term "Board
Approval" means the approval of a majority of the directors of the Company.
Immediately upon any redemption of the Rights described in this paragraph, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time and from time to
time provided that such amendment does not adversely affect the interests of the
holders of the Rights. In addition, during any time that the Rights are subject
to redemption, the terms of the
C-2
Rights may be amended by Board Approval, including an amendment that adversely
affects the interests of the holders of the Rights, without the consent of the
holders of Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Stock (or other consideration).
DESCRIPTION OF PREFERRED STOCK
Each one-hundredth of a share of the Preferred Stock ("Preferred Share
Fraction") that may be acquired upon exercise of the Rights will be
nonredeemable and subordinate to any other shares of preferred stock that may be
issued by the Company.
Each Preferred Share Fraction will have a minimum preferential
quarterly dividend rate of $0.01 per Preferred Share Fraction but will, in any
event, be entitled to a dividend equal to the per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Preferred Share Fraction
will receive a preferred liquidation payment equal to the greater of $0.01 per
Preferred Share Fraction or the per share amount paid in respect of a share of
Company Common Stock.
Each Preferred Share Fraction will have one vote, voting together with
the Company Common Stock. The holders of Preferred Share Fractions, voting as a
separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Preferred Share Fraction will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Preferred Share Fraction that may
be acquired upon the exercise of each Right should approximate the economic
value of one share of the Company's Common Stock.
C-3
