Exhibit 1
First Priority Group, Inc.
and
North American Transfer Co.
RIGHTS AGREEMENT
Dated as of December 28, 1998
TABLE OF CONTENTS
Page
Section 1. Certain Definitions............................................................-1-
Section 2. Appointment of Rights Agent....................................................-8-
Section 3. Issuance of Rights Certificates................................................-8-
Section 4. Form of Rights Certificates....................................................-9-
Section 5. Execution, Countersignature and Registration..................................-10-
Section 6. Transfer, Division, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.............................................-11-
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................-12-
Section 8. Cancellation and Destruction of Rights Certificates...........................-14-
Section 9. Reservation and Availability of Preferred Stock...............................-14-
Section 10. Preferred Stock Record Date..................................................-15-
Section 11. Adjustments to Purchase Price, Number of Shares or Number of Rights..........-16-
Section 12. Certification of Adjustments.................................................-23-
Section 13. Consolidation, Merger or Sale or Transfer of Property, Assets or Earning Power-23-
Section 14. Fractional Rights and Fractional Shares......................................-26-
Section 15. Rights of Action.............................................................-28-
Section 16. Agreement of Rights Holders Concerning Transfer and Ownership of Rights......-28-
Section 17. Rights Holder Not Deemed a Shareholder.......................................-29-
Section 18. Concerning the Rights Agent..................................................-29-
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................-30-
Section 20. Duties of Rights Agent.......................................................-30-
Section 21. Change of Rights Agent.......................................................-32-
Section 22. Issuance of New Rights Certificates..........................................-33-
Section 23. Redemption...................................................................-33-
Section 24. Notice of Certain Events.....................................................-34-
Section 25. Notices......................................................................-35-
Section 26. Amendments and Supplements...................................................-36-
Section 27. Successors...................................................................-37-
Section 28. Benefits of this Agreement; Determinations and Actions by the Board of Directors-37-
Section 29. Severability.................................................................-37-
Section 30. Governing Law................................................................-37-
Section 31. Counterparts.................................................................-38-
Section 32. Descriptive Headings.........................................................-38-
Section 33. Grammatical Construction.....................................................-38-
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RIGHTS AGREEMENT
Rights Agreement dated as of December 28, 1998, between First
Priority Group, Inc., a New York corporation (the "Company"), and North American
Transfer Co. (the "Rights Agent").
R E C I T A L S
The Board of Directors of the Company has authorized and declared
the payment of a dividend of one preferred share purchase right (the "Right")
for each share of Common Stock (as defined in Section 1) outstanding on the
Record Date (as defined in Section 1) and has authorized the issuance of one
Right for each share of Common Stock issued between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following the
Distribution Date. Each Right represents, as of the Record Date, the right to
purchase one one-thousandth of a share of Preferred Stock (as defined in Section
1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) (i) "Acquiring Person" means (x) any Person other than an
Adverse Person, an Exempt Person or any Person subject to clause (z) below, who
or which, together with all Affiliates and Associates of such Person, is (or has
previously been, at any time after the date of this Agreement, whether or not
such Person(s) continues to be) the Beneficial Owner of 20% or more of the then
Outstanding Common Stock (as defined in this Section 1), or (y) an Adverse
Person (as defined in this Section 1) who or which, together with all Affiliates
and Associates of such Adverse Person, is (or has previously been, at any time
after the date of this Agreement, whether or not such Adverse Person(s)
continues to be) the Beneficial Owner of 10% or more of the then Outstanding
Common Stock, or (z) any Person other than an Exempt Person who or which,
together with all Affiliates and Associates of such Person, is (or has
previously been, at any time after the date of this Agreement, whether or not
such Person(s) continues to be) the Beneficial Owner of 20% or more of the then
Outstanding Common Stock (as defined in this Section 1) on or before the Record
Date (10% in the case of an Adverse Person) and becomes the Beneficial Owner of
additional shares of Common Stock constituting 1% or more of the then
Outstanding Common Stock by any means whatsoever (other than as a result of the
subsequent occurrence of an Exempt Event, a stock dividend or a subdivision of
the Common Stock into a larger number of shares or a similar transaction).
(ii) A Person does not become an "Acquiring Person" solely as the
result of (A) an acquisition of Common Stock by the Company or any of its
Subsidiaries which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% (10% or
more in the case of acquisitions by an Adverse Person, and an additional 1% or
more in the cases of acquisitions by (A) any
shareholder with beneficial ownership of 20% or more on the Record Date or (B)
an Adverse Person with beneficial ownership of 10% or more on the Record Date)
or more of the then Outstanding Common Stock, or (B) such Person becoming the
Beneficial Owner of 20% (10% in the case of an Adverse Person) or more of the
then Outstanding Common Stock solely as a result of an Exempt Event; provided,
however, that if a Person becomes the Beneficial Owner of 20% (10% or more in
the case of acquisitions by an Adverse Person, and an additional 1% or more in
the cases of acquisitions by (A) any shareholder with beneficial ownership of
20% or more on the Record Date or (B) an Adverse Person with beneficial
ownership of 10% or more on the Record Date) or more of the then Outstanding
Common Stock solely by reason of such a share acquisition by the Company or the
occurrence of such an Exempt Event and such Person shall, after becoming the
Beneficial Owner of such Common Stock, become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then Outstanding Common
Stock by any means whatsoever (other than as a result of the subsequent
occurrence of an Exempt Event, a stock dividend or a subdivision of the Common
Stock into a larger number of shares or a similar transaction), then such Person
shall be deemed to be an "Acquiring Person; or (C) the inadvertent acquisition
of beneficial ownership of 20% (10% or more in the case of acquisitions by an
Adverse Person, and an additional 1% or more in the cases of acquisitions by (A)
any shareholder with beneficial ownership of 20% or more on the Record Date or
(B) an Adverse Person with beneficial ownership of 10% or more on the Record
Date) or more of the Common Stock of the Company if the Board of Directors
determines in good faith that such acquisition was inadvertent and such Person
immediately divests itself of a sufficient number of shares of Common Stock so
that such Person could no longer be an "Acquiring Person".
(b) "Adverse Person" means any Person, alone or together with its
Affiliates and Associates, with respect to whom or to which the Board of
Directors determines, after reasonable inquiry and investigation, including
consultation with such persons as it deems appropriate and consideration of such
factors as are permitted by applicable law, that (A) such Person's beneficial
ownership of 10% or more of the Outstanding Common Stock is or would be intended
to cause the Company to repurchase shares of Common Stock beneficially owned by
such Person, or to cause pressure on the Company to take action or enter into a
transaction intended to provide such Person with short-term financial gain under
circumstances where the Board of Directors determines that the best long-term
interests of the Company would not be served by taking such action or entering
into such transaction, or (B) beneficial ownership by such Person of 10% or more
of the Outstanding Common Stock would reasonably be likely to cause or is
causing a material adverse impact on the business or prospects of the Company;
provided, however, that the Board of Directors shall not declare any Person to
be an Adverse Person if such Person has reported its ownership of Outstanding
Common Stock on Schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or any comparable
or successor report) which Schedule 13D or 13G does not, in such Schedule 13D or
13G or any amendment thereto, state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in any
of the actions specified in Item 4 of such Schedule.
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(c) "Affiliate" of a Person has the meaning given 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.
(d) "Associate" of a Person has the meaning given 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.
(e) Except as provided below, a Person is the "Beneficial Owner"
of, and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate
of such Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of
such Person has, directly or indirectly, the right or obligation (whether or not
then exercisable or effective) to acquire pursuant to any agreement, arrangement
or understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any Affiliate or Associate
of such Person until such tendered securities are accepted for purchase or
exchange; and provided further, that prior to the occurrence of a Triggering
Event, a Person will not be deemed the Beneficial Owner of, or to beneficially
own, securities obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of
such Person has, directly or indirectly, the right (whether or not then
exercisable or effective) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security pursuant to this clause (iii) if the agreement,
arrangement or understanding to vote, or to direct the voting of, such security
(A) arises solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the Exchange Act and applicable rules and regulations thereunder and (B) is not
also then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor schedule or report);
(iv) which such Person or any Affiliate or Associate of
such Person has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act or any comparable or
successor provision); or
(v) which are beneficially owned, directly or indirectly,
by any other Person or any Affiliate or Associate of such other Person with whom
such Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
subparagraph (iii) of this Section 1(d)) or disposing of any securities of the
Company.
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Nothing in this Section 1(d) causes a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person is to be treated as the "Beneficial Owner"
of, or to "beneficially own," any securities owned by any other Person that is
an Exempt Person.
(f) "Board of Directors" means the Board of Directors of the
Company, as the same is constituted from time to time, or if the Company ceases
to exist as a result of a Business Combination or otherwise, the board of
directors of the Company's successor, if any.
(g) "Business Combination" has the meaning set forth in Section
13(a).
(h) "Business Day" means any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(i) "Close of Business" on any given date means 5:00 p.m., New
York, New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York, New York time, on the next
succeeding Business Day.
(j) "Common Stock" when used in any context applicable prior to a
Business Combination means the Common Stock, par value $.015 per share, of the
Company (as the same may be changed by reason of any combination, subdivision or
reclassification of the Common Stock). "Common Stock" when used with reference
to any Person (other than the Company prior to a Business Combination) means
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which shares or units do
not limit (as a fixed amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such shares or units or the
amount of property or assets distributable on such shares or units upon any
voluntary or involuntary liquidation, dissolution or winding up of such Person
and do not provide that such shares or units are subject to redemption at the
option of such Person, or any shares of capital stock or units of equity
interests into which the foregoing shall be reclassified or changed; provided,
however, that if at any time there are more than one such class or series of
capital stock of or equity interests in such Person, "Common Stock" of such
Person will include all such classes and series substantially in the proportion
of the total number of shares or other units of each such class or series
outstanding at such time.
(k) "Current Market Price" per share of Common Stock, Preferred
Stock or Equivalent Shares on any date is the average of the daily closing
prices per share of such Common Stock, Preferred Stock or Equivalent Shares for
the 30 consecutive Trading Days (as defined below in this Section 1(j)) ending
on the last Trading Day immediately prior to such date for the purpose of any
computation under this Agreement except computations made pursuant to Section
11(a)(iii), and for the 10 consecutive Trading Days immediately following such
date
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for the purpose of any computation under Section 11(a)(iii); provided, however,
that in the event that the Current Market Price per share of Common Stock,
Preferred Stock or Equivalent Shares is determined during a period following the
announcement by the issuer of such Common Stock, Preferred Stock or Equivalent
Shares of (i) a dividend or distribution on such Common Stock, Preferred Stock
or Equivalent Shares other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Preferred
Stock or Equivalent Shares, and prior to the expiration of 30 Trading Days after
the "ex-dividend" date for such dividend or distribution or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the "Current Market Price" shall be appropriately adjusted to take into account
such dividend, distribution, subdivision, combination or reclassification. The
closing price for each Trading Day shall be the last sale price, regular way, on
such day, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange
("NYSE") or, if the Common Stock, Preferred Stock or Equivalent Shares 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 United States national securities exchange on which the Common
Stock, Preferred Stock or Equivalent Shares are listed or admitted to trading
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on any United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") or such other system then in use. If on any such day the Common
Stock, Preferred Stock or Equivalent Shares are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in the Common Stock,
Preferred Stock or Equivalent Shares selected by a majority of the Board of
Directors shall be used (which selection shall be final, binding and conclusive
for all purposes). If no such market maker is making a market, the fair market
value of such shares on such day as determined in good faith by a majority of
the Board of Directors or the Board of Directors of the issuer of such Common
Stock, Preferred Stock or Equivalent Shares must be used, which determination
must be described in a statement filed with the Rights Agent and shall be final,
binding and conclusive for all purposes. The term "Trading Day" means a day on
which the principal United States national securities exchange on which the
Common Stock, Preferred Stock or Equivalent Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Stock,
Preferred Stock of Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, but are traded in the
over-the-counter market and reported by Nasdaq, then any day for which Nasdaq
reports the high bid and low asked prices in the over-the-counter market, or if
the Common Stock, Preferred Stock or Equivalent Shares are not traded in the
over-the-counter market and reported by Nasdaq, then a Business Day. If the
Common Stock, Preferred Stock or Equivalent Shares have not been so listed or
admitted to trading for 30 or more Trading Days or traded in the
over-the-counter market and reported by Nasdaq for 30 or more Trading Days,
"Current Market Price" per share means the fair market value per share as
determined in good faith by a majority of the Board of Directors, whose
determination must be described in a statement filed with the Rights Agent and
shall be final, binding and conclusive for all purposes.
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(l) "Distribution Date" means the earlier of (i) the Stock
Acquisition Date, and (ii) the tenth Business Day after the Tender Offer Date.
The Board of Directors of the Company may, at its election, defer the date set
forth in clause (ii) of the preceding sentence to a specified later date or to
an unspecified later date to be determined by a subsequent action or event.
(m) "Equivalent Shares" means any class or series of capital
stock of the Company, other than the Preferred Stock, which is entitled to
participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of any class or series
of Equivalent Shares for purposes of Section 11, the number of shares, or
fractions of a share, of such class or series of capital stock that is entitled
to the same dividend or distribution as a whole share of Preferred Stock shall
be deemed to be one share.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(o) "Exchange Date" means the time at which the Rights are
exchanged pursuant to Section 11(a)(iv).
(p) "Exempt Event" means with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock of the
Company solely as a result of the occurrence of a Triggering Event and the
effect of such Triggering Event on the last proviso of clause (ii) of the
definition of Beneficial Owner, other than a Triggering Event in which such
Person becomes an Acquiring Person.
(q) "Exempt Person" means (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any Subsidiary
of the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
(r) "Expiration Date" means the Close of Business on December 28,
2008.
(s) "Outstanding Common Stock" shall be determined in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act (or any successor or comparable provision);
provided, however, that any such calculation made for purposes of determining
the particular percentage of outstanding shares of Common Stock of which any
Person is the Beneficial Owner shall also include any such other securities not
then actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d).
(t) "Person" means any individual, firm, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity, and shall include any "group" as
that term is used in Rule 13d-5(b) under the Exchange Act (or any successor
provision).
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(u) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, par value $0.01 per share, having the rights and preferences
set forth in the Certificate of Amendment to Certificate of Incorporation of the
Company attached hereto as Exhibit A.
(v) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from such Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value; and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the property, assets or earning power transferred pursuant to such Business
Combination or, if each Person that is a party to such Business Combination
receives the same portion of the property, assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot reasonably be determined, whichever of such Persons is the
issuer of the Common Stock which has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act and such Person is a
direct or indirect Subsidiary of one or more other Persons, then (A) "Principal
Party" refers to whichever of such other Persons has Common Stock that is and
has been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act; (B) if the Common Stocks of two or more of such
other Persons are and have been so registered, "Principal Party" refers to
whichever of such other Persons is the issuer of the Common Stock which has the
greatest aggregate market value; or (C) if the Common Stock of none of such
other Persons has been so registered, "Principal Party" refers to whichever of
such other Persons (other than an individual) is the Person which has the equity
securities with the greatest aggregate market value. In case 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 above apply to each of the chains of ownership having an interest in such
joint venture as if such Person were a Subsidiary of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(w) "Purchase Price" with respect to each Right is initially
$27.50 per one one-thousandth of a share of Preferred Stock, shall be subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in cash or by certified
check or bank draft payable to the order of the Company.
(x) "Record Date" means the Close of Business on December
28, 1998.
(y) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
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(z) "Redemption Price" has the meaning given to such term in
Section 23.
(aa) "Rights Agent" means North American Transfer Co. or any
Co-Rights Agent or Successor Rights Agent appointed by the Company pursuant to
Section 2.
(bb) "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
(cc) "Stock Acquisition Date" means the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of public disclosure by the
Company, an Acquiring Person or otherwise that a Person has become an Acquiring
Person.
(dd) "Subsidiary" has the meaning given 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.
(ee) "Tender Offer Date" means the date of commencement or public
disclosure of an intention to commence (including any such commencement or
public disclosure which occurs on or after the date of this Agreement and prior
to the issuance of the Rights) a tender offer or exchange offer by a Person if,
after acquiring the maximum number of securities sought pursuant to such offer,
such Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person.
(ff) A "Triggering Event" occurs when a Person becomes an
Acquiring Person.
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.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued
in respect of and shall be evidenced by the certificates representing the shares
of Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued or which become outstanding after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates evidencing the Rights), and not by separate certificates; (ii)
the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with the shares of Common Stock represented thereby. As soon as
practicable after the Company has notified the Rights Agent of the
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occurrence of the Distribution Date, the Company will prepare and execute, and
the Company will deliver to the Rights Agent to be countersigned, which the
Rights Agent shall do, and the Rights Agent shall mail, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more certificates
evidencing the Rights ("Rights Certificates"), in substantially the form of
Exhibit B hereto, evidencing one Right (as adjusted from time to time pursuant
to this Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o), at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate adjustments (in accordance with Section 14(a)) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights.
(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 Stock, 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 (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), 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 the Summary of Rights. Until the Distribution Date (or the
earlier of the Redemption Date and the 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, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued or sold by the Company after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date, the Exchange Date or
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date or the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold pursuant to (i)
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificates
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificates
would be issued; and (y) no such Rights and Rights Certificates shall be issued,
if, and to the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date or shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date,
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the Exchange Date and the Expiration Date shall have impressed, printed, written
on or otherwise affixed to them a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between First Priority
Group, Inc. and North American Transfer Co., as Rights Agent, dated as
of December 28, 1998 (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 First Priority Group, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. First Priority Group, 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 that were,
are or become beneficially owned by Acquiring Persons or their
Associates or Affiliates (as such terms are defined in the Rights
Agreement) may become null and void and the holder of any of such Rights
(including any subsequent holder) shall not have any right to exercise
such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and the form of assignment to be printed on the reverse thereof) shall be
in substantially the form of 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 and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed or any securities association on whose interdealer quotation system the
Rights may be from time to time authorized for quotation, or to conform to
usage. Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of shares of Preferred
Stock as shall be set forth therein at the Purchase Price set forth therein, but
the number and kind of such securities and the Purchase Price shall be subject
to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i)
any Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the Distribution
Date, by a Person known by the Company to be: (A) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person; (B) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such; or (C) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (x) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders
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of equity interests in such Acquiring Person (or to holders of equity interests
in an Associate or Affiliate of such Acquiring Person) or to any Person with
whom such Acquiring Person (or an Associate or Affiliate of such Acquiring
Person) has any continuing agreement, arrangement or understanding regarding the
transferred Rights, or (y) a direct or indirect transfer which a majority of the
Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e); or (ii) any Rights Certificate issued pursuant to this Agreement upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
beneficially owned by a Person referred to in this Section 4(b), shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chairman of the Board, Chief Executive Officer,
President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep
or cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14, at any time after
the Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the
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Redemption Date, the Exchange Date or the Expiration Date, any Rights
Certificate or Rights Certificates may be transferred, divided, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock (or,
following a Triggering Event or a Business Combination, other securities, cash
or other property, as the case may be) as the Rights Certificate or Rights
Certificates surrendered entitled such holder to purchase immediately prior to
such surrender. Any registered holder desiring to transfer, divide, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and 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 Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature by the Rights Agent and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Each Right shall entitle (except as otherwise provided in
this Agreement) the registered holder thereof, upon the exercise thereof as
provided in this Agreement, to purchase, for the Purchase Price, at any time
after the Distribution Date and prior to the earliest of the Expiration Date,
the Exchange Date or the Redemption Date, one one-thousandth (1/1000) of a share
of Preferred Stock (or other securities, cash or other property or assets, as
the case may be, as provided herein), subject to adjustment from time to time as
provided in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the earliest of the Expiration
Date, the Exchange Date or the Redemption Date, by surrendering the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal corporate trust office of
the Rights
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Agent, together with payment of the Purchase Price for each one one-thousandth
of a share of Preferred Stock (or other securities, cash or other property or
assets, as the case may be, as provided herein) as to which the Rights are
exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or other securities, cash or other property or assets, as the
case may be, as provided herein) to be purchased and an amount in cash,
certified bank check or bank draft payable to the order of the Company equal to
any applicable transfer tax required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for the Preferred Stock) certificates for the total number of one
one-thousandth of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests), or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock as
are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request; (ii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder; and (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 and, promptly after receipt thereof, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate or to his duly authorized assigns, subject to
the provisions of Sections 6 and 14.
(e) Notwithstanding anything in this Agreement to the contrary,
any Rights that are or were formerly beneficially owned on or after the
Distribution Date by (i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person; (ii) a direct or indirect transferee of an Acquiring Person
(or of an Associate or Affiliate of such Acquiring Person) who becomes or
becomes entitled to be a transferee after the Acquiring Person becomes such; or
(iii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a
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direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights, and (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, from and after the first occurrence of a
Triggering Event and without any further action, be null and void and no holder
of such Rights shall have any rights whatsoever with respect to such Rights
whether under this Agreement or otherwise; provided, however, that, in the case
of transferees described in clause (ii) or clause (iii) of this Section 7(e),
any Rights beneficially owned by such transferee shall be null and void only if
and to the extent such Rights were formerly beneficially owned by a Person who
was, at the time such Person beneficially owned such Rights, or who later
became, an Acquiring Person or an Affiliate or Associate of such Acquiring
Person. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of a Rights Certificate or to any other Person
as a result of the Company's failure to make, or any delay in making (including
any such failure or delay by the Board of Directors of the Company), any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees under this Section 7(e) or any other provision of this Agreement.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
division, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu therefor except as expressly
permitted by the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
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(a) The Company covenants and agrees that it will cause to be
reserved and kept available at all times out of its authorized and unissued
shares of Preferred Stock or its authorized and issued shares of Preferred Stock
held in its treasury (and, following the occurrence of a Triggering Event or a
Business Combination, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury) free from preemptive rights
or any right of first refusal, a sufficient number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) to permit the exercise in full
of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the
Preferred Stock (and, following the occurrence of a Triggering Event or a
Business Combination, shares of Common Stock and/or other securities) issuable
upon the exercise of Rights may be listed on any United States national
securities exchange or quoted on any automated quotation system, to use its best
efforts to cause, from and after the time that the Rights become exercisable,
all such shares and/or other securities reserved for such issuance to be listed
on such exchange or quoted on such automated quotation system upon official
notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any certificates for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to (i) pay any transfer tax
which may be payable in respect of any transfer involved in the issuance or
delivery of any Rights Certificates or the issuance or delivery of any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise; or (ii) transfer or deliver any Rights Certificate or
issue or deliver any certificates for shares of Preferred Stock (or Common Stock
and/or other securities as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as
practicable following the Stock Acquisition Date (provided the consideration to
be delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii)), or as soon as is otherwise required by law
following the Distribution Date, as the case may be, to prepare and
-15-
file a registration statement on an appropriate form under the Securities Act
with respect to the securities purchasable upon exercise of the Rights; (ii) to
cause such registration statement to become effective as soon as practicable
after such filing; and (iii) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which Rights are no
longer exercisable for such securities or (B) the Expiration Date. The Company
shall also use its best efforts to take such action as may be necessary or
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercise of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause (i) of this Section 9 (e), the exercisability
of the Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the Company shall make
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. Notwithstanding any 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 has been declared effective
under the Securities Act.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (or Common Stock and/or such other
securities, as the case may be) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
open.
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kind of securities, cash
and other property obtainable upon exercise of each Right and the number of
Rights outstanding shall be subject to adjustment from time to time as provided
in this Section 11.
(a) (i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a stock
split or otherwise) the outstanding Preferred Stock into a larger number of
shares, (C) combine (by a reverse stock split or otherwise) the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any securities in
a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
surviving corporation), except as otherwise provided in this Section 11 (a),
then in each such event the Purchase Price and the Redemption Price set forth in
Section 23, as each is in effect at the time of the record date for such
dividend
-16-
or distribution, or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock or
interests therein 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 or interests
therein which, if such Right had been exercised immediately prior to such date
and at a time when the Preferred Stock 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. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event,
proper provision shall be made so that each holder of a Right, except as
otherwise provided in this Agreement, shall thereafter have the right to
receive, and the Company shall issue, upon exercise thereof at a price equal to
the then-current Purchase Price multiplied by the number of one one-thousandths
of a share of Preferred Stock for which a Right is then exercisable in
accordance with the terms of this Agreement, in lieu of the number of one
one-thousandths of a share of Preferred Stock or other securities receivable
upon exercise of a Right prior to the occurrence of the Triggering Event, 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-thousandths of a share of Preferred Stock or other securities for which a
Right was then exercisable (without giving effect to such Triggering Event) and
(y) dividing that product by 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event (such number of
shares being referred to as the "Adjustment Shares"); provided, however, that if
the transaction or event that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii). Upon the occurrence of such Triggering Event, the
Purchase Price required to be paid in order to exercise a Right shall be
unchanged, and the Purchase Price shall be appropriately adjusted to reflect,
and shall thereafter mean, the amount required to be paid per share of Common
Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii), the Company may, if a majority of the Board
of Directors of the Company determines that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect to,
and, if that the number of shares of Common Stock which are authorized by the
Company's certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights, are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall take all such action as may be necessary to
authorize, issue or pay, upon the exercise of Rights, cash (including by way of
a reduction of the Purchase Price), debt securities, property, assets or other
equity securities of the Company (including, without limitation, shares or units
of shares of preferred stock) which the Board of Directors of the Company has
determined (which determination shall be final, binding and conclusive for all
purposes) to have essentially the same value or economic rights as shares of
Common Stock (such equity securities referred to herein as "Common Stock
Equivalents), or any combination of the foregoing, having an aggregate value
equal to the value of the Adjustment Shares which otherwise would have been
issuable pursuant to Section 11(a)
-17-
(ii), which aggregate value shall be determined by a majority of the Board of
Directors (which determination shall be final, binding and conclusive for all
purposes). If a majority of the Board of Directors determines to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other property or assets pursuant to this
Section 11(a)(iii), the value of such securities and/or property or assets shall
be determined by a majority of the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected by a
majority of the Board of Directors of the Company (which determination shall be
final, binding and conclusive for all purposes). If the Company is required to
make adequate provision to deliver value pursuant to the first sentence of this
Section 11(a)(iii) and the Company shall not have made such adequate provision
to deliver value within ninety (90) days following the first occurrence of a
Triggering Event (the "Substitution Period"), then notwithstanding any provision
of Section 11(a)(ii) or this Section 11(a)(iii) to the contrary, the Company
shall be obligated to deliver, 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, cash, which shares and/or cash have an
aggregate value equal to the excess of the value of the Adjustment Shares over
the Purchase Price. If both Common Stock and cash are to be delivered pursuant
to the preceding sentence, amounts of both Common Stock and cash shall be
delivered upon surrender of each Right in a ratio of Common Stock to cash that
bears the same ratio as the total value of all Common Stock to be delivered (as
determined pursuant to this Section 11(a)(iii)) bears to the total value of all
cash to be delivered; provided, however, that the Company may adjust such ratio
to avoid issuing any fractional shares of Common Stock so long as the method of
adjustment is applied consistently to each holder of Rights entitled to receive
value with respect thereto pursuant to this Section 11(a)(iii). To the extent
that the Company determines that some action is to be taken pursuant to the
first and/or third sentences of this Section 11(a)(iii), the Company may suspend
the exercisability of the Rights but in no event to a time later than the
expiration of the Substitution Period. 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. For purposes of this Section
11(a) (iii), the value of each Adjustment Share shall be the Current Market
Price per share of the Common Stock on the Stock Acquisition Date and the per
share or per unit value of any Common Stock Equivalent shall be deemed to equal
the Current Market Price per share of the Common Stock on such date.
(iv) A majority of the Board of Directors of the Company
may, at its option, at any time and from time to time after the first occurrence
of a Triggering Event, cause the Company to exchange, for 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 7(e)), shares of Common
Stock or Common Stock Equivalents 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 of this Agreement (such
exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any
partial exchange shall be effected on a pro rata basis based on the number of
Rights (other than Rights which have become void pursuant to the provisions of
Section 7(e)) held by each holder of Rights. Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at any time
after any Person
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(other than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the then Outstanding
Common Stock.
Immediately upon the action of a majority of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to this
Section 11(a)(iv) 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
and/or Common Stock Equivalents 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 and, in addition, the Company shall promptly mail a
notice of any such exchange to all of the holders of such Rights in accordance
with Section 25; provided, however, that the failure to give, any delay in
giving or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which the
exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock which
is authorized but not outstanding or reserved for issuance for a purpose other
than exercise of the Rights is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the last sale price of
the Company's Common Stock on the fifth Trading Day following the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices on such day,
in either case on a when issued basis (taking into account the exchange), as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE (or, if the Company's
Common Stock is not so listed or traded, then as determined in the manner
provided under the definition of "Current Market Price," adjusted to take into
account the exchange). For the purposes of this Section 11(a)(iv), the value of
any Common Stock Equivalent on any date shall be the same as the value of the
Common Stock, as determined pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into or exchangeable for
Preferred Stock or Equivalent Shares) at a price per share of Preferred Stock or
Equivalent Shares (or, in the case of a convertible or exchangeable security,
having a conversion or exchange price per share of Preferred Stock or Equivalent
Shares) less than the Current Market Price per share of Preferred Stock 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
-19-
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and Equivalent Shares (if any)
outstanding on such record date, plus the number of shares of Preferred Stock or
Equivalent Shares, as the case may be, which the aggregate exercise, conversion
and/or exchange price for the total number of shares of Preferred Stock or
Equivalent Shares, as the case may be, which are obtainable upon exercise,
conversion and/or exchange of such rights, options, warrants or convertible or
exchangeable securities would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Preferred Stock and
Equivalent Shares (if any) outstanding on such record date, plus the number of
additional shares of Preferred Stock or Equivalent Shares, as the case may be,
which may be obtained upon exercise, conversion and/or exchange of such rights,
options, warrants or convertible or exchangeable securities. 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 a majority of the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be final, binding and conclusive for all purposes. Preferred
Stock and Equivalent Shares owned by or held for the account of the Company or
any Subsidiary 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 issued following such adjustment, the Purchase Price shall be readjusted to
be the Purchase Price that would have been in effect if such record date had not
been fixed.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options, warrants or convertible or exchangeable securities
referred to in Section 11(b)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of: (x) 125% of the annual rate of the regular
cash dividend paid on the Preferred Stock during the immediately preceding
fiscal year (or, if the Preferred Stock was not outstanding during such
preceding fiscal year, then 125% of the annual rate of the regular cash dividend
paid on the Common Stock during such year), or (y) in the event that a regular
cash dividend was not paid on the Preferred Stock (or Common Stock) during such
preceding fiscal year, 5% of the Current Market Value of the Preferred Stock on
the date such regular cash dividend was first declared), property, evidences of
indebtedness, or assets, 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
Current Market Price per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by a majority of the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be final, binding and conclusive for all
purposes) of the portion of such securities, cash, property, evidences of
indebtedness or assets to be so distributed in respect of one share of Preferred
Stock, and the denominator of which shall be such Current Market Price per share
of Preferred Stock on such record date. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not made following such adjustment, the Purchase Price shall be
readjusted to be the Purchase Price that would have been in effect if such
record date had not been fixed.
-20-
(d) Except as provided below, 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(d) 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, to the
nearest one hundred-thousandth of a share of Common Stock, or to the nearest one
hundred-thousandths of a share of Preferred Stock. Notwithstanding the first
sentence of this Section 11(d), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment and (ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any securities of the Company other than shares of
Preferred Stock, thereafter the Purchase Price and the number of such other
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 12, 13, 14
and 24 with respect to the shares of Preferred Stock shall apply on like terms
to any such other securities.
(f) 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 shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of any calculation made pursuant to Sections 11(a)(i), 11(b) and 11(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-thousandths of a share of Preferred Stock (calculated to the
nearest one hundred-thousandths of a share of Preferred Stock) obtained by (i)
multiplying the number of one one-thousandths of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this Section
11(g) by the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(h) The Company may elect, on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised, to adjust the number of Rights, in
lieu of an adjustment in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
outstanding prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
-21-
such adjustment by the Purchase Price in effect immediately after such
adjustment. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
after the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(h) the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date a new Rights
Certificate evidencing, subject to Section 14, 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 Rights Certificates held by such holders
prior to the date of adjustment and upon surrender thereof (if required by the
Company), new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for in this Agreement (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase
Price or the number or kind of shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-thousandth of a share of Preferred Stock
and the number of shares of Preferred Stock which were expressed in the initial
Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of one
one-thousandth of a share of Preferred 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 one one-thousandth shares of such Preferred
Stock at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property 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 (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) 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 the Board of Directors of the
-22-
Company in its sole discretion shall determine to be advisable in order that any
combination or subdivision of the Preferred Stock, issuance wholly for cash of
any Preferred Stock at less than the Current Market Price per share of Preferred
Stock, issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable or exercisable for Preferred Stock,
stock dividends or issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock,
shall not be taxable to such shareholders.
(m) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with or into,
or (iii) directly or indirectly sell, lease or otherwise transfer or dispose of
(in one transaction or a series of related transactions) property, assets or
earning power aggregating more than 50% of the property, assets or earning power
of the Company and its Subsidiaries taken as a whole, to any other Person if (A)
at the time of or immediately after such consolidation, merger, sale, lease,
transfer or disposition there are any rights, warrants, securities or other
instruments outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights; (B) prior to, simultaneously with or immediately after such
consolidation, merger, sale, lease, transfer or disposition the shareholders (or
equity holders) 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 (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The Company shall not
consummate any such consolidation, merger, sale, lease, transfer or disposition
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 11(a)(iv), 26 or
29(b), take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will, directly or
indirectly, diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding,
if the Company shall at any time prior to the Distribution Date (i) pay a
dividend or distribution on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, and the
Purchase Price under, and the number of one one-thousandths of a share of
Preferred Stock issuable in respect of, the Rights, shall be proportionately
adjusted, so that following such event one Right (with the Purchase Price and
the number of one one-thousandths of a share of Preferred Stock proportionately
adjusted thereunder) shall thereafter be associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date. For example, if the Company effects a two-for-one stock split
at a time when each Right (if it becomes exercisable) would entitle the holder
to purchase one one-thousandth of a share of Preferred Stock for a Purchase
Price of $"Z", then following such stock split each previous
-23-
Right would be split into two current Rights and thereafter each such current
Right, upon becoming exercisable, would (subject to further adjustment) entitle
the holder to purchase one one-thousandth of a share of Preferred Stock at a
Purchase Price of 1/2 x $"Z".
Section 12. Certification of Adjustments. Whenever an adjustment
is made as provided in Section 11 or 13, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock a copy of such certificate, and (c)
mail or cause the Rights Agent to mail a brief summary thereof to each holder of
a Rights Certificate (or, if no Rights Certificates have been issued, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 25. Notwithstanding the foregoing sentence, the failure of the Company
to give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment. Any adjustment to be made pursuant to
Section 11 or 13 shall be effective as of the date of the event giving rise to
such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of
Property, Assets or Earning Power.
(a) A "Business Combination" shall be deemed to occur in the
event that, on or following a Triggering Event, (i) the Company shall, directly
or indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(m) and Section 11(n)) in a transaction in which the Company is not the
continuing, resulting or surviving corporation of such merger or consolidation;
(ii) any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) and Section 11(n)) shall, directly or indirectly,
consolidate with the Company, or shall merge with and into the Company, in a
transaction in which the Company is the continuing, resulting or surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of the
Company or of any other Person, cash or any other property); (iii) the Company
shall, directly or indirectly, effect a share exchange in which all or part of
the Common Stock shall be changed (including, without limitation, any conversion
into or exchange for securities of any other Person, cash or any other
property); or (iv) the Company shall, directly or indirectly, sell, lease,
exchange, mortgage, pledge (other than pledges in the ordinary course of the
Company's financing activities) or otherwise transfer or dispose of (or one or
more of its Subsidiaries shall directly or indirectly sell, lease, exchange,
mortgage, pledge (other than pledges in the ordinary course of the Company's
financing activities) or otherwise transfer or dispose of), in one transaction
or a series of related transactions, property, assets or earning power
aggregating more than 50% of the property, assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or any of its Subsidiaries in one or more transactions each and all
of which comply with Section 11(m) and Section 11(n)).
In the event of a Business Combination, proper provision shall be
made so that each holder of a Right (except as otherwise provided in this
Agreement) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the Purchase Price immediately
-24-
prior to the first occurrence of a Triggering Event multiplied by the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event
(without giving effect to the Triggering Event) in accordance with the terms of
this Agreement, such number of shares of Common Stock of the Principal Party as
shall be equal to the result obtained by (x) multiplying the Purchase Price
immediately prior to the first occurrence of a Triggering Event by the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event
(without giving effect to the Triggering Event), and (y) dividing that product
by 50% of the Current Market Price per share of the Common Stock of such
Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of any kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the
Principal Party shall be liable for, and shall assume, by virtue of such
Business Combination and without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement, (ii) the term
"Company" as used in this Agreement shall thereafter be deemed to refer to such
Principal Party, and (iii) such Principal Party shall take all steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9) in connection with such Business
Combination as is necessary to ensure that the provisions of this Agreement
shall thereafter be applicable, as nearly equivalent as practicable, in relation
to the shares of its Common Stock thereafter deliverable upon the exercise of
the Rights.
(c) The Company shall not consummate any Business Combination
unless prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13; (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights; (B) use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; (C) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may
-25-
be necessary or appropriate; (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange; and (F) 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; (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms; and (iv) the Company and the Principal Party
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for which a Right is exercisable or
the number of Rights outstanding or associated with each share of Common Stock
or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the
event the nature of the organization of any Principal Party shall preclude or
limit the acquisition of Common Stock of such Principal Party upon exercise of
the Rights as required by Section 13(a) as a result of a Business Combination,
it shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
(h) In addition to, and without limiting, any other provision of
this Section 13, in case the Principal Party which is to be a party to a
transaction referred to in this Section 13 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
-26-
in this Section 13, Common Stock of such Principal Party at less than the then
Current Market Price per share 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 provisions in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of this 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.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, the Company may at its option pay to the registered
holders of the Rights Certificates with respect 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 a Right
for the Trading Day immediately prior to the date on which such fractional
Rights otherwise would have been issuable. The closing price for any Trading Day
shall be the last sale price on such day, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, 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 United
States national securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to trading on any United
States national securities exchange, the last quoted sale price on such day or,
if not so quoted, the average of the high bid and low asked prices on such day
in the over-the-counter market, as reported by Nasdaq or such other system then
in use or, if on such day the Rights are not quoted by any such system, the
average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Board of Directors of the Company (which selection shall be final,
binding and conclusive for all purposes). If on such day no such market maker is
making a market in the Rights, the current market value of the Rights on such
day shall be determined in good faith by a majority of the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be final, binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts pursuant to an
appropriate
-27-
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 Stock. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a share
of Preferred Stock, the Company may at its option (i) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive a full one one-thousandth of a share of Preferred Stock upon the
surrender of such scrip or warrants aggregating a full one one-thousandth of a
share of Preferred Stock, or (ii) pay to the registered holders of Rights
Certificates at the time such Rights Certificates are exercised as provided in
this Agreement an amount in cash equal to the same fraction of the current
market value of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to the second
sentence of the definition of "Current Market Price" in Section 1) 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 Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) Current Market Price of
the Company's Common Stock.
(d) The holder of a Right by his acceptance thereof expressly
waives any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all
rights of action in respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, any registered holders of associated Common Stock); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date, any share
of associated Common Stock), without the consent of the Rights Agent or of the
holder of any other Right, may, on his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company or any Principal Party to enforce, or otherwise act in respect of,
his rights pursuant to 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, without posting any bond, to
specific performance of the obligations under, and injunctive relief against any
actual or threatened violation of the obligations of any Person subject to, this
Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
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(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name a Rights 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 Rights Certificate or the associated Common Stock
certificate made by anyone other than the Company, the transfer agent for the
Common Stock or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate shall be entitled to vote or to receive
dividends or distributions or shall be deemed for any purpose the holder of
Preferred Stock or any other securities, cash or other property which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights
of a shareholder of the Company, including, without limitation, any right (i) to
vote for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, (ii) to give or withhold consent to any corporate
action, (iii) to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24), (iv) to receive dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities issuable on exercise of the Rights represented by any
Rights Certificate, any derivative action on behalf of the Company, or
otherwise, until and only to the extent that the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
-29-
Agent for, and to hold it harmless against, any loss, liability or expense
incurred without gross negligence, bad faith, willful misconduct or breach of
this Agreement on the part of the Rights Agent for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. This indemnification shall survive the termination of
this Agreement.
The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock 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 reasonably believed by it to
be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under Section 21. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement any of the
Rights 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 Rights Certificate so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificate either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
and agrees to perform the duties and obligations imposed by this Agreement upon
the following terms and conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
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(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or the determination of
Current Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, the Chief Executive Officer, 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 or omitted by it in good faith under this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the gross
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agents.
(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
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights 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 Rights Certificate; nor shall it be responsible for any change in the
transferability or exercisability of the Rights or any change or adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13 or 23 or any other provision of this Agreement
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 Rights
Certificates after actual notice of any 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 shares of Preferred Stock, Common
Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for
-31-
the carrying out or performance by the Rights Agent of its duties and
obligations under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from 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 it shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for such instructions. When applying to any such officer for
instructions, the Rights Agent may set forth in writing (i) any proposed action
or omission of the Rights Agent with respect to its duties or obligations under
this Agreement and (ii) the date on or after which the Rights Agent proposes
such action will be taken or omitted. Such date shall not be less than three
Business Days after any such officer receives such application for instructions
from the Rights Agent. Unless the Rights Agent has received written instructions
from the Company (including any such officer) with respect to such proposed
action or omission prior to such date (or, if longer, in the case of a proposed
action to be taken, prior to the Rights Agent actually taking such action), the
Rights Agent shall not be liable for the actions or omissions set forth in such
application, provided that such action or omission does not violate any express
provision of this Agreement.
(h) The Rights Agent and any shareholder, 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 the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of such attorney or
agent, provided that the Rights Agent exercised reasonable care in the selection
and continued employment of such attorney or agent.
(j) 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
hereunder if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to the Rights Agent.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
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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
Stock by registered or certified mail, and to the holders of the Rights
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 Stock by registered or certified mail, and to
the holders of the Rights 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. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or any state of the United States so long as
such corporation is authorized to conduct a corporate trust or banking business
under the laws of such state and is in good standing, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed but the predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for such 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 Stock and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Neither the failure to give any
notice provided for in this Section 21, however, nor any defect therein, shall
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 Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing new Rights in such form as may be approved by a majority of the Board
of Directors of the Company to reflect any adjustment or change in the Purchase
Price per share and the number or kind or class of securities, cash or other
property purchasable under the Rights 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 Redemption
Date, the Company may with respect to 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
-33-
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 earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding Rights
at a redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. The Company may, at its option, pay
the Redemption Price in cash, shares (including fractional 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) At the time and date of effectiveness set forth in any
resolution of the Board of Directors of the Company ordering the redemption of
the Rights (the "Redemption Date"), without any further action and without any
further 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; provided, however, that such resolution of the Board of Directors of the
Company may be revoked, rescinded or otherwise modified at any time prior to the
time and date of effectiveness set forth in such resolution, in which event the
right to exercise will not terminate at the time and date originally set for
such termination by the Board of Directors of the Company. As soon as
practicable after the action of the Board of Directors of the Company ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and to the holders of the then-outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the issuance of Rights
Certificates, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner provided in this Agreement 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. In any case, failure to give such notice by mail, or any defect in
the notice, to any particular holder of Rights shall not affect the sufficiency
of the notice to other holders of Rights. In the case of a redemption permitted
under this Section 23, the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last addresses
as they appear on the registry books of the Rights Agent or, prior to the
issuance of the Rights Certificates, on the registry books of the transfer agent
for the Common Stock, and upon such action, all outstanding Rights Certificates
shall be null and void without any further action by the Company. 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 as specifically set
forth in this Section 23 and other than in connection with the purchase of
shares of Common Stock prior to the earlier of the Distribution Date and the
Expiration Date.
-34-
Section 24. Notice of Certain Events. In case the Company, on or
after the Distribution Date, shall propose to (a) pay any dividend payable in
stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend at an annual rate not in excess of: (x) 125% of the
annual rate of the cash dividend paid on the Preferred Stock during the
immediately preceding fiscal year, or if the Preferred Stock was not outstanding
during such preceding fiscal year, then 125% of the annual rate of the cash
dividend paid on the Common Stock during such year, or (y) in the event that a
regular cash dividend was not paid on the Preferred Stock (or Common Stock)
during such preceding fiscal year, 5% of the Current Market Value of the
Preferred Stock on the date such regular cash dividend was first declared); or
(b) offer to the holders of its Preferred Stock rights, options or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options; or (c) effect
any reclassification of the Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock, a
change in the par value of such Preferred Stock or a change from par value to no
par value); or (d) directly or indirectly effect any consolidation or merger
into or with, or effect any sale, lease, exchange or other transfer or
disposition (or to permit one or more of its Subsidiaries to effect any sale,
lease, exchange or other transfer or disposition), in one transaction or a
series of related transactions, of more than 50% of the property, assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person; or (e) effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right, in accordance with Section 25, a notice of such proposed action, which
shall specify any record date for the purposes of such stock dividend,
distribution or rights, or the date on which such reclassification,
consolidation, merger, sale, lease, exchange, transfer, disposition,
liquidation, dissolution, or winding up is to take place and if such holders
will or may participate therein, the date of participation therein by the
holders of Common Stock and/or Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein, if any, by the holders of
Preferred Stock, whichever shall be the earlier.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11(a)(ii)
or 13.
The failure to give notice as required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid,
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addressed (until another address (or another person's attention) is filed in
writing with the Rights Agent) as follows:
First Priority Group, Inc.
00 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Chairman and Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address (or
another person's attention) is filed in writing with the Company) as follows:
North American Transfer Co.:
000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx Xxxxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights 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 (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to the holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Amendments and Supplements. This Agreement may not be
amended or supplemented except as permitted in Section 26(a) or 26(b) or as
contemplated by Section 11(a)(iii).
(a) At any time prior to the Stock Acquisition Date, a majority
of the Board of Directors of the Company may, and the Rights Agent shall, if so
directed, amend or supplement any provision of this Agreement without the
approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority of the
Board of Directors of the Company may, and the Rights Agent shall, if so
directed, amend or supplement this Agreement without the approval of any holders
of Rights Certificates (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained in this Agreement which may be defective or inconsistent
with any other provision of this Agreement, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights
-36-
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person).
(c) Immediately upon the action of a majority of the Board of
Directors providing for any amendment or supplement pursuant to this Section 26,
and without any further action and without notice, such amendment or supplement
shall be deemed effective. Promptly following the adoption of any amendment or
supplement pursuant to this Section 26, the Company shall deliver to the Rights
Agent a copy, certified by the Secretary or any Assistant Secretary of the
Company, of resolutions of a majority of the Board of Directors of the Company
adopting such amendment or supplement. Upon such delivery, the amendment or
supplement shall be administered by the Rights Agent as part of this Agreement
in accordance with the terms of this Agreement, as so amended or supplemented.
Section 27. 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 28. Benefits of this Agreement; Determinations and
Actions by the Board of Directors. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered holders of Rights any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights.
The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights, to exchange or not exchange
the Rights for Common Stock or other securities of the Company, or to amend or
supplement this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board 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 and all other Persons, and
(y) not subject the Board of Directors of the Company to any liability to the
holders of the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this
Agreement or the application thereof to any Person or to any circumstance 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.
-37-
(b) If legal counsel to the Company delivers to the Company a
written opinion to the effect that, as a result of changes in federal law or New
York law, any term, provision, covenant or restriction of this Agreement may be
invalid, void or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed in accordance with the internal laws of such state applicable to
contracts to be made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. 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 of
this Agreement.
Section 33. Grammatical Construction. Throughout this Agreement,
where such meanings would be appropriate, (a) any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms (e.g., references
to "he" shall also include "she" and "it" and references to "who" and "whom"
shall also include "which"), (b) the plural form of nouns and pronouns shall
include the singular and vice-versa, (c) reference to a Section means a Section
of this Agreement, and (d) the word "including" means "including, without
limitation," whether expressly stated or not.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
FIRST PRIORITY GROUP, INC.
Attest:
/s/ Xxxx X. Xxxxxxxxxx By:/s/ Xxxxx Xxxxxx
---------------------- --------------------------
Assistant Secretary Name: Xxxxx Xxxxxx
Title: Chairman and CEO
NORTH AMERICAN TRANSFER CO.
By:/s/ Xxxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Principal
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Exhibit A
RESTATED CERTIFICATE OF INCORPORATION
OF
FIRST PRIORITY GROUP, INC.
Under Section 807 of the Business Corporation Law
FIRST: The name of the corporation is First Priority Group, Inc.
(the "Corporation") originally incorporated under the name Unisearch, Inc.
SECOND: The certificate of incorporation of the Corporation was
filed by the Department of State on the 28th day of June, 1985.
THIRD: The restatement of the certificate of incorporation herein
certified was authorized by the Board of Directors of the Corporation.
FOURTH: The text of the certificate of incorporation is hereby
restated without further amendment or change to read as follows:
CERTIFICATE OF INCORPORATION
OF
FIRST PRIORITY GROUP, INC.
Under Section 402 of the New York Business Corporation Law
*****
FIRST: The name of the corporation is First Priority Group, Inc.
(the "Corporation") originally incorporated under the name Unisearch, Inc.
SECOND: The certificate of incorporation of said corporation was
filed by the Department of State on the 28th day of June, 1985.
THIRD: The offices of the Corporation is to be located in the
Town of Hempstead, County of Nassau, State of New York.
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is twenty-one million (21,000,000), divided
into two classes. The designation of each class, the number of share of each
class, and the par value of the shares of each class, are as follows:
Number of Shares Class Par Value per Share, if any
---------------- ----- ---------------------------
Twenty Million (20,000,000) Common $.015
One Million (1,000,000) Preferred $.01
The relative rights, preferences and limitations of the shares of
each class are as follows:
A. Authorized Shares.
The total number of shares of all classes of stock that the Corporation
shall have the authority to issue is 21,000,000 shares of which 1,000,000 shares
shall be Preferred Stock, having a par value of $0.01 per share ("Preferred
Stock"), and 20,000,000 shall be Common Stock, having a par value of $0.015 per
share (Common Stock"). The Board of Directors is expressly authorized to provide
for the classification and reclassification of any unissued shares of Preferred
Stock or Common Stock and issuance thereof in one or more classes or series
without the approval of the stockholders of the Corporation.
B. Common Stock.
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(1) Relative Rights.
The Common Stock shall be subject to all of the rights, privileges,
preferences and priorities of the Preferred Stock as set forth in the
certificate or certificates of designation filed to establish the respective
series of Preferred Stock. Each share of Common Stock shall have the same
relative rights as and be identical in all respects to all the other shares of
Common Stock.
(2) Voting Rights.
Each holder of shares of Common Stock shall be entitled to attend all
special and annual meetings of the stockholders of the Corporation and, share
for share and without regard to class, together with the holders of all other
classes of stock entitled to attend such meeting and to vote (except any class
or series of stock having special voting rights), to cast one vote for each
outstanding share of Common Stock so held upon any matter or thing (including,
without limitation, the election of one or more directors) properly considered
and acted upon by the stockholders, except as otherwise provided in this
Certificate of Incorporation or by applicable law.
(3) Dividends.
Whenever there shall have been paid or declared and set aside for
payment, to the holder of shares of any class of stock having preference over
the Common Stock as to the payment of dividends, the full amount of dividends
and of sinking fund or retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then the holders of
record of the Common Stock and any class or series of stock entitled to
participate therewith as to dividends, shall be entitled to receive dividends,
when, as, and if declared by the Board of Directors, out of any assets legally
available for the payment of dividends thereon.
(4) Dissolution, Liquidation, Winding Up.
In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of record of the
Common Stock then outstanding, and all holders of any class or series of stock
entitled to participate in the distribution of any assets of the Corporation
remaining after the Corporation shall have paid, or set aside for payment, to
the holders of any class of stock having preference over the Common Stock in the
event of dissolution, liquidation or winding up, the full preferential amount
(if any) to which they are entitled, and shall have paid or provided for payment
of all debts and liabilities of the Corporation.
C. Preferred Stock.
(1) Issuance, Designations, Powers, Etc.
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The Board of Directors expressly is authorized, subject to limitations
prescribed by the New York Business Corporation Law and the Provisions of this
Certificate of Incorporation, to provide, by resolution and by filing an
amendment to the Certificate of Incorporation pursuant to the New York Business
Corporation Law, for the issuance from time to time of the shares of Preferred
Stock in one or more series, to establish from time to time the number of shares
to be included in each series, and to fix the designation, powers, preferences
and other rights of the shares of each such series and to fix the
qualifications, limitations and restrictions thereon, including, but without
limiting the generality of the foregoing, the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) the dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any or payment of dividends on shares of that
series;
(c) whether that series shall have voting rights, in addition to
voting rights provided by law, and, if so, the terms of such voting rights;
(d) whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including provisions for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
(e) whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such retention, including the dates upon
or after which they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
(f) whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) the rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(h) any other relative powers, preferences and rights of that
series, and qualifications, limitations or restrictions on that series.
(2) Dissolution, Liquidation, Winding Up.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock of
each series shall be entitled to receive only such amount or amounts as shall
have been fixed by the certificate or designations or by the resolution or
resolutions of the Board of Directors providing for the issuance of such series.
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D. Junior Participating Preferred Stock.
(1) Designation and Amount; Rank.
The shares of such series shall be designated as "Junior Participating
Preferred Stock" (the "Junior Preferred Stock") and the number of shares
constituting such series shall be 200,000. 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 Junior 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 or exchange of any outstanding securities issued
by the Corporation convertible into or exchangeable for Junior Preferred Stock.
The Junior Preferred Stock shall rank, with respect to the payment of dividends
and the distribution of assets upon liquidation, dissolution or winding up of
the Corporation, junior to all other series of Preferred Stock and to all other
classes preferred or special stock, and all series of any thereof, and senior to
the Common Stock.
(2) Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock and of any shares of any other class of
preferred or special stock, and any series of any thereof, ranking prior and
superior to the shares of Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the holders of
Common Stock, par value $.015 per share, of the Corporation and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Junior Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $100.00 and (b) the sum of (i) the Adjustment Number (as defined below)
times the aggregate per share amount of all cash dividends, and (ii) the
Adjustment Number 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 or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Junior Preferred Stock. The "Adjustment Number" shall be
1000, as adjusted from time to time pursuant to this paragraph (A). In the event
the Corporation shall at any time after December 28 , 1998 (i) declare or pay
any dividend on the Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock into a greater number of shares, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
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outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (a) of this Article Four Section
D immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in like 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 Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $100.00 per share on
the Junior Preferred Stock shall, when, as and if declared by the Board of
Directors out of funds legally available for such purpose, nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Junior Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Junior 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 Junior Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
(3) Voting Rights.
The holders of shares of Junior Preferred Stock shall have the
following voting rights:
(a) Each share of Junior Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted from
time to time pursuant to Article Four Section D hereof) on all matters submitted
to a vote of the shareholders of the Corporation.
(b) Except as otherwise provided herein, in the Restated Certificate or
by-laws, the holders of shares of Junior Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
(c) (i) If at any time dividends on any Junior Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency
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shall xxxx the beginning of a period (herein called a "default period") that
shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly period on all
shares of Junior Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, (1) the number of
Directors shall be increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of Junior Preferred Stock
and the holders of other Preferred Stock upon which these or like voting rights
have been conferred and are exercisable (the "Voting Preferred Stock") with
dividends in arrears equal to six quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect such two Directors.
(ii) During any default period, such voting right of the holders
of Junior Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Article Four Section D or at any annual
meeting of shareholders, and thereafter at annual meetings of shareholders,
provided that such voting right shall not be exercised unless the holders of at
least one-third in number of the shares of Voting Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders of Voting Preferred
Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than 10% of the total number of shares of
Voting Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the President,
the Chief Executive Officer, any Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Voting Preferred Stock are entitled to vote pursuant to this paragraph
(3)(C)(iii) shall be given to each holder of record of Voting Preferred Stock by
mailing a copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 10 days and not later than 60 days after such order or request or,
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any shareholder or
shareholders owning in the aggregate not less than 10% of the total number of
shares of Voting Preferred Stock outstanding. Notwithstanding the provisions of
this paragraph (3)(C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next annual
meeting of the shareholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class, (x)
the Directors so elected by the holders of Voting Preferred Stock shall continue
in office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (3)(C)(iv) to Directors elected by the holders of a particular class
or classes of stock
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shall include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors shall
be such number as may be provided for in or pursuant to the Restated Certificate
or By-Laws irrespective of any increase made pursuant to the provisions of this
paragraph (3)(C)(v) (such number being subject, however, to change thereafter in
any manner provided by law or in the Restated Certificate or By-Laws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.
(d) Except as set forth herein, holders of Junior 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.
(4) Certain Restrictions.
Whenever quarterly dividends or other dividends or distributions payable
on the Junior Preferred Stock as provided in Article Four Section D are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(vi) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(vii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
dividends paid ratably on the Junior 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;
(viii) 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 Junior Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (as to dividends and upon dissolution, liquidation or winding up) to the
Junior Preferred Stock; or
(ix) purchase or otherwise acquire for consideration any shares
of Junior Preferred Stock, or any shares of stock ranking on a parity with the
Junior 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
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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 Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
D(4), purchase or otherwise acquire such shares at such time and in such manner.
(5) Reacquired Shares.
Any shares of Junior Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock, without serial
designation, 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
the conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of Common Stock or shares of other
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock unless, prior thereto, the holders of
shares of Junior Preferred Stock shall have received per share an amount equal
to the Adjustment Number times $1.00, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all other 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.
(7) Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Junior Preferred Stock then
outstanding shall at the same time be similarly exchanged or changed in an
amount per share equal to the Adjustment Number 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 changed or
exchanged.
(8) No Redemption.
The shares of Junior Preferred Stock shall not be redeemable.
(9) Amendment.
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The Certificate of Incorporation of the Corporation shall not be amended
in any manner which would materially alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Junior Preferred Stock, voting together as a single class.
(10) Fractional Shares.
At the Corporation's sole discretion, Junior Preferred Stock may be
issued in fractions of a share which 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 Junior Preferred Stock.
FIFTH: The Secretary of State is designated as the agent of the
Corporation upon whom process against the Corporation may be served. The post
office address within the State of New York to which the Secretary of State
shall mail a copy of any process against the corporation served upon him is:
First Priority Group c/o Morritt & Wolfed, 000 Xxx Xxxxxxx Xxxx, Xxxxxx Xxxx,
Xxx Xxxx 00000.
SIXTH: The duration of the Corporation is to be perpetual
SEVENTH: The following provisions are inserted for the regulation and
conduct of the affairs of the Corporation and it is expressly provided that they
are intended to be in furtherance and not in limitation or exclusion of the
powers conferred by statute:
(a) Meetings of the shareholders or directors of the Corporation
for all purposes may be held at its office or elsewhere within or without the
State of New York, at such place or places as may from time to time be
designated in the by-laws, or by unanimous resolution of the board of directors.
(b) All corporate powers except those which by law expressly
require the consent of the shareholders shall be exercised by the board of
directors.
(c) The board of directors shall have the power from time to time
to fix and determine and vary the amount of the working capital of the
Corporation, and to direct and determine the use and disposition of any surplus
or net profits over and above its capital, and in its discretion, the board of
directors may use and apply any such surplus or accumulated profits in
purchasing or acquiring bonds or other obligations of the corporation or its own
capital shares, to such extent and in such manner and upon such terms as the
board of directors shall deem expedient, but any such capital shares so
purchased or acquired may be resold unless such shares shall have been retired
in the manner provided by law for the purpose of decreasing the Corporation's
capital.
(d) Any one or more or all of the directors may be removed with
or without cause, at any time, by the vote of the shareholders holding a
majority of the shares of the Corporation entitled to vote at any special
meeting and thereupon the term of such director or
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directors who shall have been so removed shall forthwith terminate, and there
shall be a vacancy or vacancies in the board of directors to be filled as
provided in the by-laws.
(e) Subject always to by-laws made by the shareholders, the board
of directors may make by-laws and from time to time may alter, amend or repeal
any by-laws, but any by-laws made by the board of directors may be altered or
repealed by the shareholders.
(f) Any one or more members of the board of directors of the
Corporation or of any committee thereof may participate in a meeting of said
board or of any such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time.
EIGHTH: No holder of any of the shares of any class of the Corporation
shall be entitled as a right to subscribe for, purchase, or otherwise acquire
any shares of any class of the Corporation which the Corporation proposes to
issue or any rights or options which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the corporation which are
convertible into or exchangeable for, or which carry any rights, to subscribe
for, purchase or otherwise acquire shares of any class of the Corporation; any
and all such shares, bonds, securities, or obligations of the Corporation, which
are new or are hereafter authorized or created, may be issued, or may be
reissued or transferred if the same have been reacquired and have treasury
status, and any and all of such rights and options may be granted by the board
of directors to such persons, firms, corporations and associations, and for such
lawful consideration, and on such terms as the board of directors in its
discretion may determine without first offering the same, or any thereof, to any
said holder. Without limiting the generality of the foregoing stated denial of
any and all preemptive rights, no holder of shares of any class of the
Corporation shall have any preemptive rights in respect of matters, proceedings,
or transaction specified in paragraphs (1) to (6) inclusive, of paragraph (a) of
Section 622 of the New York Business Corporation Law.
NINTH: Except as may otherwise be specifically provided in this
certificate of incorporation, no provision of this certificate of incorporation
is intended by the corp;oration to be construed as limiting, prohibiting,
denying or abrogating any of the general or specific powers or rights conferred
under the New York Business Corporation Law upon the Corporation, upon its
shareholders, bondholders and security holders, and upon its directors, officers
and other corporate personnel including, in particular, the power of the
Corporation to furnish indemnification to directors and officers in the
capacities defined and prescribed rights of said persons in indemnification as
the same are conferred by the New York Business Corporation Law.
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IN WITNESS WHEREOF, the undersigned has executed and subscribed
this Certificate and does affirm the foregoing as true this 30th day of
December, 1998.
/s/ Xxxxx Xxxxxx
-----------------------
Name: Xxxxx Xxxxxx
Title: Chairman and CEO
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Exhibit B
Form of Rights Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER DECEMBER 28, 2008 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.
Rights Certificate
FIRST PRIORITY GROUP, INC.
This certifies that _________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of December 28, 1998 (the "Rights
Agreement") between First Priority Group, Inc., a New York corporation (the
"Company"), and North American Transfer Co. (the "Rights Agent"), unless notice
of redemption shall have been previously given by the Company, to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 p.m., New York, New York, time on
December 28, 2008, at the principal corporate trust office of the Rights Agent,
or at the office of its successor as Rights Agent, one one-thousandth of a fully
paid and nonassessable share of the Junior Participating Preferred Stock, par
value $0.01 per share, of the Company (the "Preferred Stock"), at a purchase
price (the "Purchase Price") of $27.50 per one one-thousandth share, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase duly executed. The Purchase Price may be paid in cash or by
certified bank check or bank draft payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock or other securities, cash or other property
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring
Person), such Rights may become null and void, in which event the holder of any
such Right (including any subsequent holder) shall not have any rights with
respect to such Right.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal corporate trust office of the
Rights Agent, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock or other property
as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered entitled such holder to purchase. If this Rights Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $0.01 per Right, subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors may determine at any time prior to the earlier of (i) 12:00
a.m. (midnight, New York, New York time) on the Stock Acquisition Date, and (ii)
the Expiration Date, or (b) may be exchanged after the Stock Acquisition Date by
the Board of Directors of the Company at its option in whole or in part for
shares of the Company's Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions
that are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depository receipts)
are required to be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof the Company may elect to (i) evidence fractional
shares by depositary receipts, (ii) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or in bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share, or
(iii) make a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled
to vote or to receive dividends on, or shall be deemed for any purpose the
holder of, Preferred Stock or of any other securities, cash or property which
may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or this Certificate be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to share-
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holders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or to institute, as a holder of Preferred Stock or other
securities issuable on the exercise of the Rights represented by this
Certificate, any derivative action, or otherwise, until and only to the extent
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ________ __, ____.
FIRST PRIORITY GROUP, INC.
By: ______________________________
Name:
Title:
Countersigned:
BANK
By: __________________________
Authorized Officer
Form of Reverse Side of Rights Certificate
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ________________ hereby sells,
assigns and transfers unto ___________________________________ (Please print
name and address of transferee) _________ Rights evidenced by this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________________ with a power
of Attorney to transfer the said Rights and a Rights Certificate evidencing such
Rights on the books of First Priority Group, Inc., with full power of
substitution.
A new Rights Certificate evidencing the remaining balance, if
any, of such Rights not hereby sold, assigned and transferred shall be mailed to
and registered in the name of the undersigned unless such person requests that
such Rights Certificate be registered in the name of and mailed to (complete
only if a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the name of the undersigned):
Please insert Social Security or
other identifying number of transferee: _________________________
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
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Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate or any Rights evidenced hereby __ are
__ are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned __ did __did not acquire any of the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
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NOTICE
The signature on the foregoing Form of Assignment must correspond
to the name as written upon the face of this Rights 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 is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: First Priority Group, Inc.
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:
Please insert social security
or other identifying number: ________________________
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
A new Rights Certificate evidencing the remaining balance, if
any, of such Rights not hereby exercised shall be mailed to and registered in
the name of the undersigned unless such person requests that such Rights
Certificate be registered in the name of and mailed to (complete only if Rights
Certificate evidencing any remaining balance of Rights is to be registered in a
name other than the name of the undersigned):
Please insert social security
or other identifying number: ________________________
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
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Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate __are __are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned __ did __ did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________________________ __________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
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NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an assignment or other transfer of this Rights Certificate
or any Rights evidenced hereby, will affix a legend to that effect on any Rights
Certificate issued in whole or partial exchange for this Rights Certificate.
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Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On December 28, 1998, the Board of Directors of First Priority
Group, Inc. (the "Company") authorized the issuance of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$0.015 per share (the "Common Stock"), of the Company. The distribution is
payable to the shareholders of record at the close of business on December 28,
1998 (the "Record Date"), which is also the payment date, and with respect to
all shares of Common Stock that become outstanding after the Record Date and
prior to the earliest of the Distribution Date (as defined below), the
redemption of the Rights, the exchange of the Rights, or the expiration of the
Rights (and, in certain cases, following the Distribution Date). Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of a Junior Participating Preferred Stock, par value $0.01 per share,
of the Company (the "Preferred Stock") at an exercise price of $27.50 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights, and certain defined terms
used herein, are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and North American Transfer Co. as Rights Agent (the "Rights
Agent"), dated as of December 28, 1998.
Until the earlier to occur of (i) the first date of public
disclosure that a person or group other than certain Exempt Persons (an
"Acquiring Person"), together with persons affiliated or associated with such
Acquiring Person (other than those that are Exempt Persons), has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more (10% or more
in the case of acquisitions by an Adverse Person, and an additional 1% or more
in the cases of acquisitions by (A) any shareholder with beneficial ownership of
20% or more on the Record Date or (B) an Adverse Person with beneficial
ownership of 10% or more on the Record Date) of the outstanding Common Stock
(the "Stock Acquisition Date") and (ii) the tenth business day after the date
(the "Tender Offer Date") of commencement or public disclosure of an intention
to commence a tender offer or exchange offer by a person other than an Exempt
Person if, upon consummation of the offer, such person could acquire beneficial
ownership of 20% or more (10% or more in the case of acquisitions by an Adverse
Person, and an additional 1% or more in the cases of acquisitions by (A) any
shareholder with beneficial ownership of 20% or more on the Record Date or (B)
an Adverse Person with beneficial ownership of 10% or more on the Record Date)
of the outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Stock certificates
and not by separate certificates. The Rights Agreement provides that, until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
the Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Common Stock certificates issued after December 28, 1998, upon transfer or
new issuance of shares of Common Stock, will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights) the surrender for transfer of
any certificate for Common Stock will
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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 ("Right
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 Right Certificates
alone will evidence the Rights.
The Rights will first become exercisable on the Stock Acquisition
Date (unless sooner redeemed or exchanged). The Rights will expire at the close
of business on December 28, 2008 (the "Expiration Date"), unless earlier
redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities, cash or other 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 or distribution on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights, options or warrants to subscribe for
Preferred Stock or securities convertible into or exchangeable for Preferred
Stock at less than the 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, subject to certain
limitations set forth in the Rights Agreement) or of subscription rights or
warrants (other than those referred to above). In addition, the Purchase Price
payable, and the number of shares of Preferred Stock purchasable, on exercise of
a Right is subject to adjustment in the event that the Company should (i)
declare or pay any dividend on the Common Stock payable in Common Stock or (ii)
effect a subdivision or combination of the Common Stock into a different number
of shares of Common Stock.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
In the event that there is public disclosure that an Acquiring
Person has become such, proper provision would be made so that each holder of a
Right, other than Rights that are or were beneficially owned by the Acquiring
Person and certain related persons and transferees (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
shares of Common Stock (or other securities) having at the time of such
transaction a market value of two times the Purchase Price of the Right. In
addition, the Company's Board of Directors has the option of exchanging all or
part of the Rights (excluding void Rights) for an equal number of shares of
Common Stock in the manner described in the Rights Agreement.
In the event that, at any time following public disclosure that
an Acquiring Person has become such, the Company is involved in a merger or
other business combination transaction where the Company is not the surviving
corporation or where the Common Stock
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is changed or exchanged or in a transaction or transactions as a result of which
50% or more of its consolidated assets or earning power are sold, proper
provision would be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price of the Right, that number of shares of common stock of the
acquiring company or the Company, as the case may be, which at the time of such
transaction would have a market value of two times the Purchase Price of the
Right.
At any time prior to public disclosure that an Acquiring Person
has become such, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
payable in cash, shares (including fractional shares) of Common Stock or any
other form of consideration deemed appropriate by the Board of Directors.
At any time prior to the Stock Acquisition Date, the Board of
Directors of the Company may amend or supplement the Rights Agreement without
the approval of the Rights Agent or any holder of the Rights. From and after the
Stock Acquisition Date, the Board of Directors of the Company may generally only
amend or supplement the Rights Agreement without such approval only to cure
ambiguity, correct or supplement any defective or inconsistent provision or
change or supplement the Rights Agreement in any manner which shall not
adversely affect the interests of the holders of the Rights (other than an
Acquiring Person or an affiliate or associate thereof). Immediately upon the
action of the Board of Directors providing for any amendment or supplement, such
amendment or supplement will be deemed effective.
The Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment, when, as and if declared by the Board
of Directors of the Company, equal to the greater of $100 per share and 1,000
times the dividend declared per Common Stock. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a preferential liquidation
payment equal to $1,000 per share, plus accrued and unpaid dividends. Each share
of Preferred Stock will have 1,000 votes per share, voting together with the
Common Stock. In the event of any merger, consolidation or other transaction in
which the Common Stock is exchanged, each share of Preferred Stock will be
entitled to receive 1,000 times the amount received per Common Stock.
Exempt Persons include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any Subsidiary
of the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
The Rights may have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group (except as described above with
respect to an Exempt Person) that attempts to acquire the Company on terms not
approved by the Board. The Rights should not interfere with any merger or other
business combination approved by the Board of
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Directors prior to the time a person or group other than an Exempt Person has
acquired beneficial ownership of 20% (10% or more in the case of acquisitions by
an Adverse Person, and an additional 1% or more in the cases of acquisitions by
(A) any shareholder with beneficial ownership of 20% or more on the Record Date
or (B) an Adverse Person with beneficial ownership of 10% or more on the Record
Date) or more of the Common Stock, because until such time the Rights may
generally be redeemed by the Company at $0.01 per Right.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to an Application for Registration on Form
8-A and as an Exhibit to the Company's Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
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