EXHIBIT 1
RIGHTS AGREEMENT
INSITUFORM TECHNOLOGIES, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
DATED AS OF FEBRUARY 26, 2002
INDEX
Page
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Section 1. Certain Definitions..................................................................................1
Section 2. Appointment of Rights Agent..........................................................................3
Section 3. Issue of Right Certificates..........................................................................3
Section 4. Form of Right Certificates...........................................................................5
Section 5. Countersignature and Registration....................................................................5
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates..............................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........................................7
Section 8. Cancellation and Destruction of Right Certificates...................................................8
Section 9. Reservation and Availability of Shares of Preferred Stock............................................8
Section 10. Preferred Stock Record Date..........................................................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...................................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..........................................14
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................14
Section 14. Fractional Rights and Fractional Shares.............................................................16
Section 15. Rights of Action....................................................................................17
Section 16. Agreement of Right Holders..........................................................................17
Section 17. Right Certificate Holder Not Deemed a Stockholder...................................................18
Section 18. Concerning the Rights Agent.........................................................................18
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................................18
Section 20. Duties of Rights Agent..............................................................................19
Section 21. Change of Rights Agent..............................................................................21
Section 22. Issuance of New Right Certificates..................................................................21
Section 23. Redemption and Termination..........................................................................22
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Page
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Section 24. Exchange............................................................................................23
Section 25. Notice of Proposed Actions..........................................................................24
Section 26. Notices.............................................................................................24
Section 27. Supplements and Amendments..........................................................................25
Section 28. Successors..........................................................................................25
Section 29. Benefits of this Agreement..........................................................................25
Section 30. Severability........................................................................................25
Section 31. Governing Law.......................................................................................25
Section 32. Counterparts........................................................................................25
Section 33. Descriptive Headings................................................................................26
EXHIBIT A - Form of Certificate of Designation..................................................................A-1
EXHIBIT B - Form of Right Certificate..........................................................................B-1
EXHIBIT C - Form of Summary of Preferred Stock Purchase Rights..................................................C-1
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RIGHTS AGREEMENT
This Agreement, dated as of February 26, 2002, is entered into between
INSITUFORM TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 26, 2002, the Board of Directors of the Company
authorized and declared a dividend distribution of one right (hereinafter
referred to as a "Right") for each share of Class A Common Shares, $0.01 par
value, of the Company outstanding at the close of business on March 13, 2002
(the "Record Date") (other than shares of such Common Stock held in the
Company's treasury on such date) and has authorized the issuance of one Right in
respect of each share of Common Stock of the Company issued between the Record
Date (whether originally issued or issued from the Company's treasury) and the
Distribution Date (as such term is defined in Section 3 hereof), each Right
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
WHEREAS, the Company desires to appoint the Rights Agent to act as provided
herein, and the Rights Agent is willing to so act;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined)
who or which, together with all Affiliates (as hereinafter defined) and
Associates (as hereinafter defined) of such Person, without the prior written
approval of a majority of the Board of Directors, shall be the Beneficial Owner
(as hereinafter defined) of securities of the Company constituting 20% or more
of the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 20% or more of
the Voting Power of the Company, but shall not include the Company, any
Subsidiary of the Company, or any employee benefit plan of the Company or any
Subsidiary of the Company. Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of: (i) an acquisition of Common Stock by
means of shares issued directly by the Company which increases the proportionate
Voting Power of such securities beneficially owned by such Person to 20% or more
of the Voting Power, where such acquisition is approved by a majority of the
Board of Directors; provided, however, that such Person was not an Acquiring
Person prior to such acquisition of shares from the Company; (ii) an acquisition
of voting securities of the Company by the Company which, by reducing the amount
of such securities outstanding, increases the proportionate Voting Power of such
securities beneficially owned by such Person to 20% or more of the Voting Power;
provided, however, that if a Person becomes the Beneficial Owner of securities
constituting 20% or more of the Voting Power by reason of purchases by the
Company and shall, after such purchases by the Company, become the Beneficial
Owner of any additional voting securities of the Company (other than pursuant to
a stock dividend, stock split, capitalization or similar transaction that does
not affect the percentage of voting securities beneficially owned by such
person), then such Person shall be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if a majority of the Board of Directors then in
office determines
in good faith that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to this Section 1(a), has become such inadvertently, and such
Person divests as promptly as practicable after notification thereof a
sufficient number of shares of voting securities of the Company so that such
Person would no longer be an Acquiring Person, then such Person shall not be
deemed to be an "Acquiring Person" for purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.
(c) A person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has: (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for payment or exchange; or (B) the right to
vote pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of any security under
this clause (B) if the agreement, arrangement or understanding to vote such
securities (1) 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 applicable rules and regulations of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy or consent as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the States of Missouri or [state where
Rights Agent is located] are authorized or obligated by law or executive order
to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Central time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Central time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the Class A Common Shares, $0.01 par
value, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock with the greatest
Voting Power of such Person or the equity
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securities or other equity interest having power to control or direct the
management of such Person or, if such Person is a Subsidiary (as hereinafter
defined) of another Person, of the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock,
equity securities or equity interests.
(g) "Distribution Date" shall have the meaning defined in Section 3
hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of any such entity.
(j) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, $0.10 par value, of the Company.
(k) "Purchase Price" shall have the meaning defined in Section 4
hereof.
(l) "Stock Acquisition Date" shall mean the earlier of (i) the first
date of public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such, or (ii) the date on which the Company first
has notice, direct or indirect, or otherwise determines that a Person has become
an Acquiring Person.
(m) "Subsidiary" shall mean any corporation or other entity of which
the securities or other ownership interests having ordinary Voting Power, in the
absence of contingencies, to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by another corporation or other entity and shall include Subsidiaries of
Subsidiaries, except that "Subsidiary" when used with reference to the Company
shall mean any corporation or other entity of which either a majority of the
Voting Power of the voting equity securities or a majority of the equity
interests is owned, directly or indirectly, by the Company.
(n) "Voting Power" shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of directors
of the Person (or, where appropriate, for the election of persons performing
similar functions).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof shall prior to the Distribution Date also be
the holders of the Common Stock) 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. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agent and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date or (ii) the Close of Business on the tenth day
(or such later date as may be determined by action of a majority of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement of, or first public announcement of the intent of
any Person (other than the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company
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or of any Subsidiary of the Company) to commence (which intention to commence
remains in effect for five Business Days after such announcement), without the
prior written approval of a majority of the Board of Directors, a tender or
exchange offer which would result in any Person becoming the Beneficial Owner of
securities representing 20% or more of the Voting Power of the Company
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to
as the "Distribution Date"): (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates) and
not by separate Right Certificates, as more fully set forth below, and (y) the
Rights (and the right to receive certificates therefor) will be transferable
only in connection with the transfer of the underlying shares of Common Stock,
as more fully set forth below. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Company shall prepare and execute, and the Rights Agent shall countersign and
send, at the expense of the Company, 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, at the address of such holder shown on the records of the
Company, a right certificate, in substantially the form of Exhibit B hereto (the
"Right Certificate"), evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date until the Distribution Date (or the earlier
redemption, exchange, expiration or termination of the Rights), the Rights will
be evidenced by such certificates for the Common Stock registered in the names
of the holders of the Common Stock and the registered holders of the Common
Stock shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, exchange, expiration or
termination of the Rights), the surrender for transfer of any of the
certificates for the Common Stock outstanding in respect of which Rights have
been issued (with or without a copy of the Summary of Rights attached thereto)
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date or the redemption, exchange,
expiration or termination of the Rights shall be deemed also to be certificates
for Rights and shall have impressed, printed or written on, or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Insituform
Technologies, Inc. and the Rights Agent, the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Insituform Technologies, 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. Insituform Technologies, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
following receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring Persons (as defined
in the Rights Agreement), the Acquiring Person's Affiliates and Associates
(as defined in the Rights Agreement), and any subsequent holder of such
Rights, may become null and void.
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With respect to such certificates containing the foregoing legend,
until the Distribution Date (or the earlier redemption, exchange, expiration or
termination of the Rights), the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates shall also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificates.
In the event that the Company purchases or acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
which are no longer outstanding. Upon reissuance of such Common Stock by the
Company prior to the Distribution Date (or earlier redemption, exchange,
expiration or termination of the Rights), the Rights shall again attach to such
Common Stock as set forth in this Section 3(c).
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
customary usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Right Certificates, whenever issued, shall be dated as of the Record Date,
and on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as shall be set forth therein
at the price per one one-hundredth of a share as set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price shall be
and remain subject to adjustment as provided in Sections 11 and 13 hereof.
(b) Any Right Certificate issued pursuant to Section 3(a) hereof that
represents Rights as to which an Acquiring Person or any Associate or Affiliate
thereof is the Beneficial Owner and any Right Certificate issued at any time
upon the transfer of any Rights to an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Right Certificate issued pursuant to Section 6 hereof,
Section 11 hereof or Section 22 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person. This Right Certificate and the Rights represented hereby
may become void in the circumstances specified in Section 7(e) of the
Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by the Chief Executive Officer, the 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
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Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent or any registrar for the Common Stock (the "Registrar") and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent or the Registrar and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent or the Registrar, issued and delivered with the same force and
effect as though the Person who signed such Right Certificates had not ceased to
be such officer of the Company. Any Right Certificate may be signed on behalf of
the Company by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates, the certificate number of each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date (as such term is defined in Section 7(a) hereof), any Right
Certificate or Certificates (other than Right Certificates representing Rights
that have become void pursuant to Section 7(e) hereof) may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon, the Rights Agent or the
Registrar shall countersign and deliver to the Person entitled thereto a Right
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to the Company and the Rights Agent, 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 Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent or the Registrar for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent
together with payment of the Purchase Price for each one one-hundredth of a
share of Preferred Stock as to which the Rights are exercised, at or prior to
the Close of Business on the earlier of (i) March 12, 2012 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof or (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof (such earlier date being herein referred to as the
"Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be One
Hundred Sixteen Dollars ($116.00), subject to adjustment from time to time as
provided in Sections 11 and 13 hereof, and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of the
Rights pursuant hereto in accordance with Section 9 hereof in cash, or by
certified check or money order payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) either (A)
requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent), certificates for the
number of shares 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, in its sole discretion, shall have elected to deposit the
shares of Preferred Stock issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby irrevocably authorizes the
depositary agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, promptly deliver such cash in
lieu of issuance of fractional shares to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of any of the events listed in Section 11(b) or in Section 13(a)
hereof, any Rights of which an Acquiring Person or any Associate or Affiliate of
the Acquiring Person was the Beneficial Owner at any time on or after the
earlier of the Stock Acquisition Date or the Distribution Date shall become void
with respect to the rights provided under Section 11(b) and Section 13(a) hereof
and any holder of such Rights shall thereafter have no right to exercise such
rights under the provisions of Section 11(b) and Section 13(a).
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(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless the certification contained in
the appropriate form of election to purchase set forth on the reverse side of
the Right Certificate surrendered for such exercise shall have been properly
completed and duly executed by the registered holder thereof and the Company
shall have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of such Rights or Affiliates or
Associates of such Beneficial Owner (or former Beneficial Owner) as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent in canceled form, or, if surrendered to
the Rights Agent in uncanceled form, shall be canceled by the Rights Agent, and
no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights and, after the occurrence
of an event specified in Section 11(b) hereof, shall so reserve and keep
available a sufficient number of shares of Preferred Stock, Common Stock and/or
other securities which may be required to permit the exercise in full of the
Rights pursuant to this Agreement.
(b) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock and/or
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which (with the passage
of the prescribed time periods set forth in Section 3(a) hereof) would establish
the Distribution Date, a registration statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the date of
the expiration of the Rights. The Company will also take such action as may be
appropriate under the Blue Sky laws of the various states.
(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 issuance or delivery of the Right Certificates
or of any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be
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payable in respect of any transfer involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates or depositary receipts
for Preferred Stock and/or other securities in a name other than that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, nor shall the Company be required to issue or deliver any certificates
or depositary receipts for shares of Preferred Stock and/or other securities
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until the Company has established to its satisfaction that no such
tax is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
Company) in whose name any certificate for shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and 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 other securities) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder as a Right Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) In the event the Company shall at any time after the date of this
Agreement (ii) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii) combine
the outstanding Preferred Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11, the Purchase Price in effect at the
time of the record date for such dividend or the time of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock, including Preferred Stock, issuable upon exercise of a
Right, shall be proportionately adjusted so that the holder of any Right
exercised after such time, upon payment of the aggregate Purchase Price such
holder would have to pay to exercise such Right prior to such time, shall be
entitled to receive the aggregate number and kind of shares of capital stock,
including Preferred Stock, 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.
(b) In the event any Person shall become an Acquiring Person, then
proper provision shall be made so that each holder of Rights, subject to Section
7(e) and except as provided below, shall after the later of the occurrence of
such event and the effective date of an appropriate registration statement
pursuant to Section 9 hereof, shall have a right to receive, upon exercise
thereof and payment of the then current Purchase Price of the Rights exercised
by the holder in accordance with the terms of this Agreement, in lieu of shares
of Preferred Stock, 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
- 9 -
number of Rights then exercised by the holder of the Rights and dividing that
product by (y) 50% of the Current Market Price per one share of Common Stock
(determined pursuant to Section 11(f) hereof on the date of the occurrence of
any one of the events listed above in this subparagraph (b)) (such number of
shares being referred to as the "Number of Adjustment Shares").
(c) In the event that there shall not be sufficient shares in
treasury or authorized but unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with the foregoing Section 11(b)
and the Rights become so exercisable, notwithstanding any other provision of
this Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
a number of shares, or unit of shares, of (x) Common Stock, and (y) any class or
series of preferred stock (or other equity securities) of the Company,
including, but not limited to Preferred Stock, equal in the aggregate to the
Number of Adjustment Shares where the Board of Directors shall have in good
faith deemed such shares or units, other than the shares of Common Stock, to
have at least the same value and voting rights as the Common Stock (a "Common
Stock Equivalent"); provided however, if there are unavailable sufficient shares
(or fractions of shares) of Common Stock and/or Common Stock Equivalents, then
the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Common Stock Equivalents for issuance upon
exercise of the Rights, including the calling of a meeting of stockholders; and
provided, further, that if the Company is unable to cause sufficient shares of
Common Stock and/or Common Stock Equivalents to be available for issuance upon
exercise in full of the Rights, then the Company, to the extent necessary and
permitted by applicable law, and any agreements or instruments in effect on the
date thereof to which it is a party, shall make provision to pay an amount in
cash equal to twice the Purchase Price (as adjusted pursuant to this Section
11), in lieu of issuing shares of Common Stock and/or Common Stock Equivalents.
To the extent that the Company determines that some action needs to be taken
pursuant to this Section 11(c), a majority of the Board of Directors may suspend
the exercisability of the Rights for a period of up to sixty (60) days following
the date on which the event described in Section 11(b) hereof shall have
occurred, in order to decide the appropriate form of distribution to be made
pursuant to this Section 11(c) and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended. The Board
of Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock and Common Stock Equivalents upon exercise of
the Rights among holders of Rights, which such allocation may be, but is not
required to be, pro rata.
(d) If the Company shall fix a record date for the issuance of rights
or warrants to all holders of Preferred Stock entitling them (for a period
expiring within 90 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("Equivalent Preferred
Stock")) or securities convertible into Preferred Stock or Equivalent Preferred
Stock, at a subscription or purchase price per share of Preferred Stock or per
share of Equivalent Preferred Stock or having a conversion price per share, as
the case may be, less than the Current Market Price per share of Preferred Stock
(as defined in Section 11(f) hereof) on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate subscription or purchase price of the total number of shares of
Preferred Stock or Equivalent Preferred Stock to be offered for subscription or
purchase (and/or the aggregate initial conversion price of the convertible
securities so to be offered for subscription or purchase) would purchase at such
Current Market Price, and the denominator of which shall be the number of shares
of Preferred Stock outstanding on such record date plus the number of
- 10 -
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription or
purchase price (and/or the conversion price of convertible securities) 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, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(e) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such Current
Market Price for one share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the "Current
Market Price" of any Security (a "Security" for purposes of this Section
11(f)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive Trading Days (as
hereinafter defined) immediately prior to such date; provided, however, that in
the event that the Current Market Price per share of such Security is determined
during a period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into shares of such Security or (B) any subdivision,
combination or reclassification of such Security, and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or distribution or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "Current Market Price" shall be appropriately adjusted to
reflect the Current Market Price per share equivalent of such Security. The
closing price for each day shall be the last transaction price as reported by
the NASDAQ National Market or, if not so reported, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the NASDAQ
Stock Market or such other system then in use, or, if the Security is not
reported by such organization, the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by a professional market maker in the Security selected by a majority
of the Board of Directors. If on any such date no market maker is making a
market in the Security, the fair value of such Security on such date as
determined in
- 11 -
good faith by a majority of the Board of Directors shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day. If the Security is not
publicly held or not so listed or traded, "Current Market Price" shall mean the
fair value as determined in good faith by a majority of the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent.
(ii) For the purposes of any computation hereunder, the "Current
Market Price" per share (or one one-hundredth of a share) of Preferred Stock
shall be determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(f) (other than the last sentence thereof). If
the Current Market Price per share (or one one-hundredth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(f), the "Current Market Price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock and the "Current Market Price" per one one-hundredth of a share
of Preferred Stock shall be equal to the Current Market Price per share of the
Common Stock (as appropriately adjusted). If neither the Common Stock or the
Preferred Stock is publicly held or so listed or traded, "Current Market Price"
per share shall mean the fair value per share as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(g) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share, as the case may be.
Notwithstanding the first sentence of this Section 11(g), 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 mandates such adjustment or (ii)
the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Section 7, 9, 10, 13
and 14 hereof with respect to the shares of Preferred Stock shall apply on like
terms to any such other shares.
(i) 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 capital stock of the Company purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment of the
Purchase Price.
(j) Unless the Company shall have exercised its election as provided
in Section 11(k) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(d) and (e) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (A) the number of one one-
- 12 -
hundredths of a share of Preferred Stock covered by a Right immediately prior to
the adjustment by (B) 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.
(k) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares 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-hundredths of a
share of Preferred Stock for which such Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If the Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(k), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock or other securities and below one one-hundredth of the then par value, if
any, of the 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 shares of such Preferred Stock, Common Stock or other securities
at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is
to receive a combination of Common Stock and Common Stock Equivalents, a portion
of the consideration paid upon such exercise, equal to at least the then par
value of a share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable
- 13 -
upon such exercise over and above the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(o) 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 in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then Current Market Price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such stockholders.
(p) The Company covenants and agrees that it shall not, at any time
after the Distribution Date and so long as the Rights have not been redeemed
pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i)
consolidate with, (ii) merge with or into, or (iii) sell or transfer, in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, if at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(q) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23 hereof or
Section 24 hereof, take any action the purpose or effect of which is to diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustments therein contained and shall not be
obligated or responsible for calculating any adjustment nor shall the Rights
Agent be deemed to have knowledge of such adjustment unless and until the Rights
Agent shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, directly or indirectly, following the
Distribution Date, (x) the Company shall consolidate with, or merge with and
into, any other Person, (y) any Person shall consolidate with or merge with and
into the surviving corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell, or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than to the Company or one or more of its
- 14 -
wholly owned Subsidiaries, then, and in each such case, proper provision shall
be made so that (i) each holder of Rights, subject to Section 7(e), shall
thereafter have the right to receive, upon the exercise thereof and payment of
the then current Purchase Price in accordance with the terms of this Agreement,
in lieu of Preferred Stock, such number of shares of freely tradable Common
Stock of the Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims, as shall
be equal to the result obtained by (A) multiplying the then current Purchase
Price by the number of Rights then exercised by the holder of the Rights and
dividing that product by (B) 50% of the Current Market Price per share of the
Common Stock of such Principal Party (determined in the manner described in
Section 11(f) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; (ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof, except for the
provisions of Section 11(b), shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in accordance with this
Section 13(a)) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean"
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a) hereof, the Person that is the issuer
of any securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the Person,
including the Company, that is the other party to the merger or consolidation;
and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any case described in clause (i) or (ii) in this
Section 13(b), (x) 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 or Affiliate of another Person, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
market value, and (z) 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 in (x) and (y) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such party 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 this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interest.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
- 15 -
(i) prepare and file 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, will use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing and will use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the Blue Sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last transaction price as reported by the NASDAQ National
Market or, if not so reported, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the NASDAQ Stock Market or such
other system then in use, or, if the Rights are not reported by such
organization, the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices as furnished by a professional
market maker in the Rights selected by a majority of the Board of Directors. If
on any such date no market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by a majority of
the Board of Directors shall be used.
(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-hundredth 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-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the
- 16 -
registered holders of Right Certificates at the time such Right Certificates are
exercised as herein provided, an amount in cash equal to the same fraction of
the current market value of one one-hundredth of a share of Preferred Stock. For
purposes of this Section 14(b), the current market value of one one-hundredth of
a share of Preferred Stock shall be one one-hundredth of the closing price of a
share of Preferred Stock (as determined pursuant to Section 11(f)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 hereof giving rise to the right to receive Common
Stock, Common Stock Equivalents or other securities (other than Preferred Stock)
upon the exercise of a Right, the Company shall not be required to issue
fractions of shares or units of such Common Stock, Common Stock Equivalents or
other securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of such Common Stock, Common Stock Equivalents or
other securities. In lieu of fractional shares or units of such Common Stock,
Common Stock Equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share or unit of such Common Stock, Common Stock Equivalent or
other securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(f)(i) hereof for the
Trading Day immediately prior to the date of such exercise and, if such Common
Stock, Common Stock Equivalent or other securities are not traded, each such
share or other unit of Common Stock, Common Stock Equivalent or other securities
shall have the value of one one-hundredth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14,
the holder of a Right by the acceptance of the Rights expressly waives his right
to receive any fractional Rights or any fractional share upon exercise of
Rights.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except for rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement. Holders
of Rights shall be entitled to recover the reasonable costs and expenses,
including attorneys' fees, incurred by them in any action to enforce the
provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only with the transfer of Common Stock;
- 17 -
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense (including the costs
and expenses of enforcing this right of indemnification), incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability. The indemnity provided for herein
shall survive the expiration of the Rights and the termination of this
Agreement.
The Rights Agent may conclusively rely upon and shall be
protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate for Preferred
Stock, Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons. Notwithstanding
anything in this Agreement to the contrary, in no event shall the Rights Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. 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 or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the
- 18 -
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any act or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chief Executive Officer, the
President or any Vice President and by the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, and all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition
- 19 -
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of Sections 11 and
13 hereof or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice to the Rights Agent of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred
Stock, Common Stock or other securities to be issued pursuant to this Agreement
or any Right 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 the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Chief Accounting Officer, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken or omitted by it in
good faith in accordance with instructions of any such officer. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken or suffered to be taken or omitted by
it in good faith during the period beginning on the date on which the Rights
Agent has applied for written instructions from the Company and ending on the
date upon which the Rights Agent receives such instructions or for action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than ten Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application with respect to
the proposed action or omission and/or specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or have a pecuniary interest in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(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
- 20 -
or in the exercise of its rights 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 it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, 2 and/or 3
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company. The
Rights Agent shall not be required to take notice or be deemed to have notice of
any fact, event or determination (including, without limitation, any dates or
events defined in this Agreement or the designation of any Person as an
Acquiring Person, Affiliate or Associate) under this Agreement unless and until
the Rights Agent shall be specifically notified in writing by the Company of
such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon a 30-day notice in writing mailed to the Company and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class mail
at the expense of the Company. The Company may remove the Rights Agent or any
successor Rights Agent upon a 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 and Preferred Stock by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor Rights Agent. 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 the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a successor Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any state, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $25,000,000, or (b) an affiliate of a corporation described in clause (a)
of this sentence. 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. The predecessor
Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall mail a written notice
thereof in writing to the predecessor Rights Agent by certified or registered
mail and each transfer agent of the Common Stock and Preferred Stock, and mail a
written notice thereof to the registered holders of the Right Certificates by
first class mail. Failure to give any notice provided for this Section 21, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by a majority of the Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
- 21 -
Section 23. Redemption and Termination.
(a) (i) A majority of the Board of Directors of the Company may,
at its option, at any time prior to the earlier of (x) the time that any Person
becomes an Acquiring Person or (y) the Final Expiration Date, elect to redeem
all but not less than all of the then outstanding Rights at a redemption price
of $0.01 per Right, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights by the Board may be made effective at such time, on such basis and
with such conditions as the Board in its sole discretion may establish.
(ii) In addition, prior to any event described in Section
13(a), a majority of the Board of Directors may redeem all but not less than all
of the then outstanding Rights at the Redemption Price:
(A) following the occurrence of a Stock Acquisition
Date if a Person who is an Acquiring Person shall have transferred or otherwise
disposed of a number of shares of voting securities of the Company in a manner
satisfactory to the Board of Directors such that such Person is thereafter a
Beneficial Owner of securities having less than 20% of the Voting Power of the
Company, and immediately thereafter there is no other Person who is an Acquiring
Person;
(B) following the occurrence of a Stock Acquisition
Date in connection with any transaction not involving an Acquiring Person or an
Affiliate or Associate of an Acquiring Person;
(C) following a change (resulting from a proxy or
consent solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in such
solicitation becomes an Acquiring Person during the solicitation and has stated
upon the commencement of such solicitation (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company has determined
in good faith) that such Person intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person.
(b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the action of a majority of the Board of Directors
electing to redeem the Rights, evidence of which shall be promptly filed with
the Rights Agent, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. In the case of a
redemption permitted under Section 23(a)(ii), evidence of which shall have been
filed with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten (10)
business days following the giving of such notice of such redemption to the
holders of such Rights. The Company shall promptly give public disclosure of any
such redemption; provided, however, that the failure to give, or any defect in,
any such disclosure shall not affect the validity of such redemption. Within 10
days after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing by first class mail such notice to all such
holders at their last addresses as they appear upon the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
- 22 -
(c) Neither the Company nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time or in any
manner other than that specifically set forth in this Section 23, and other than
in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock for Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a share of Preferred Stock,
as appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share
of Preferred Stock delivered in lieu of each share of Common Stock shall have
the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or of Preferred Stock issued but not outstanding, or authorized but
unissued, to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock or of Preferred Stock for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractional shares
of Common Stock or of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) or to distribute
certificates which evidence fractional shares of such Common Stock or of
Preferred Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of
- 23 -
the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash as determined by Section 14 hereof.
Section 25. Notice of Proposed Actions. In case the Company shall
propose (a) to 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 out of earnings or
retained earnings of the Company), or (b) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any other class or
any other securities, rights or options, or (c) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (d) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sales or other
transfer), in one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall mail by first class mail to
each holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be fixed.
Such notice shall be so given in the case of any action covered by clauses (a)
or (b) above at least ten 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 ten days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Preferred Stock,
whichever shall be the earlier. The failure to give notice required by this
Section 25, or any defect therein, shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any of the events set forth in Section 11(b) of this
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter mail by first class mail to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(b) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (unless another address is filed in
writing with the Rights Agent) as follows:
INSITUFORM TECHNOLOGIES, INC.
702 Spirit 00 Xxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by registered or certified mail or overnight courier with
a reputable national courier service and shall be deemed given upon receipt and
addressed (unless another address is filed in writing with the Company) as
follows:
- 24 -
AMERICAN STOCK TRANSFER & TRUST COMPANY
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X'Xxxxx / Xxxxxx Xxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company or the Rights Agent.
Section 27. Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any holders
of Right Certificates in order to increase the Purchase Price of the Rights, to
extend the term of this Agreement, to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall be consistent with, and for the purpose of fulfilling,
the objectives of the Board of Directors in adopting this Agreement, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement. This Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
It is the intent of the parties hereto to enforce the remainder of the terms,
provisions, covenants and restrictions to the maximum extent permitted by law.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
- 25 -
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the day and year first above written.
Attest: INSITUFORM TECHNOLOGIES, INC.
By By
--------------------------------------- -----------------------------
Name: Name:
Title: Title:
Attest: AMERICAN STOCK TRANSFER & TRUST
COMPANY
By By
--------------------------------------- -----------------------------
Name: Name:
Title: Title:
- 26 -
EXHIBIT A
[FORM OF CERTIFICATE OF DESIGNATION]
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
INSITUFORM TECHNOLOGIES, INC.
I, Xxxxxxx X. Xxxxxx, the President and Chief Executive Officer
of Insituform Technologies, Inc., a corporation organized and existing under the
Delaware General Corporation Law, in accordance with the provisions of Section
151 thereof, DO HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended, of the Company, the
said Board of Directors on February, 26, 2002 adopted the following resolution
creating a series of Six Hundred Thousand (600,000) shares of voting Preferred
Stock designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Certificate of
Incorporation, as amended, a series of voting Preferred Stock of the Company be
and it is hereby created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount.
There shall be a series of the voting preferred stock of the
Company which shall be designated as the "Series A Junior Participating
Preferred Stock," $0.10 par value, and the number of shares constituting such
series shall be Six Hundred Thousand (600,000). Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company ranking prior and superior to the
Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock, in
preference to the holders of shares of Class A Common Shares, $0.01 par value
(the "Common Stock"), of the Company 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
or about the first day of January, April, July and October 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 Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or
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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
Series A Junior Participating Preferred Stock. In the event the Company shall at
any time after February 26, 2002 (the "Rights Declaration Date") declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided, however, 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 $1.00 per share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first 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 Series A Junior Participating
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 Series A Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of shares of Series A Junior Participating Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted to a vote
of the stockholders of the Company.
(B) Except as otherwise provided herein, in the Company's
Certificate of Incorporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of Common Stock, and the
holders of shares of any other capital stock of the Company
A-2
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's
Certificate of Incorporation, and except as otherwise provided by law, holders
of Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock;
(ii) 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 Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) except as permitted in Section 4(A)(iv) below, redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock, provided, however,
that the Company may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Series A Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the
A-3
acquisition thereof. The Company shall cause all such shares upon their
cancellation to be authorized but unissued shares of Preferred Stock which may
be reissued as part of a new series of Preferred Stock, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock, unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
paragraph (C) of this Section 6 to reflect such events as stock dividends, and
subdivisions, combinations and consolidations with respect to the Common Stock)
(such number in clause (ii) being referred to as the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to 1 with respect
to such Series A Junior Participating Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the 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 outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that are outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc.
In case the Company 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 Series A Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per
A-4
share (subject to the provision for adjustment hereinafter set forth) equal to
100 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is exchanged or changed. In the event the Company shall at
any time after the Rights Declaration Date declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.
Section 8. Redemption.
The shares of Series A Junior Participating Preferred Stock shall
not be redeemable.
Section 9. Ranking.
The Series A Junior Participating Preferred Stock shall rank
junior to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Fractional Shares.
Series A Junior Participating Preferred Stock may be issued in
fractions which are integral multiples of one one-hundredth of a share.
Fractions of shares of Series A Junior Participating Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by the
Company. The holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Series A Junior Participating Preferred Stock represented by such depositary
receipts.
A-5
IN WITNESS WHEREOF, I have executed and subscribed this
Certificate and do affirm and acknowledge the foregoing as true under the
penalties of perjury this ____ day of March, 2002.
By:
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
State of Missouri )
) SS.
County of St. Louis )
On this _______ day of March, 2002, before me, ______________, a
Notary Public in and for the State of Missouri, personally appeared Xxxxxxx X.
Xxxxxx, President and Chief Executive Officer of Insituform Technologies, Inc.,
known to me to be the person who executed the foregoing Certificate of
Designation and acknowledged to me that he executed the same pursuant to
authority given by the Board of Directors of such corporation as their free and
voluntary act, and as the free and voluntary act and deed of such corporation,
for the uses and purposes therein set forth.
----------------------------------------------
Notary Public
My commission expires:
---------------------------------
A-6
EXHIBIT B
[FORM FACE OF RIGHT CERTIFICATE]
Certificate No. Rights
---------------------------- --------------------
NOT EXERCISABLE AFTER MARCH 12, 2012 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT OR EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO
WAS AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
INSITUFORM TECHNOLOGIES, 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 February 26, 2002 (the "Rights Agreement"),
between Insituform Technologies, Inc., a Delaware corporation (the "Company"),
and American Stock Transfer & Trust Company (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M. (Central time) on March
12, 2012 (the "Final Expiration Date") at the principal office of the Rights
Agent, or its successor as Rights Agent, one one-hundredth of a fully paid,
nonassessable share of the Series A Junior Participating Preferred Stock, $0.10
par value ("Preferred Stock"), of the Company, at a purchase price of One
Hundred Sixteen Dollars ($116.00) per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase on the reverse side hereof duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise of each Right) and the
Purchase Price set forth above, are the number and Purchase Price as of March
13, 2002, based on the shares of Preferred Stock of the Company as constituted
at such date. As provided in the Rights Agreement, the Purchase Price and the
number of shares of Preferred Stock which may be purchased upon the exercise of
each of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of
-----------------
*The portion of the legend in brackets shall be inserted only as
applicable.
B-1
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive, upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right prior to the earlier of (i) the time that
any Person becomes an Acquiring Person (as defined in the Rights Agreement) or
(ii) the Final Expiration Date. Under certain terms and conditions, the Rights
may also be redeemed following the time that any person becomes an Acquiring
Person but prior to the Final Expiration Date, as more fully described in the
Rights Agreement. In addition, subject to the provisions of the Rights
Agreement, the Rights may be exchanged at the option of the Company at any time
after any person becomes an Acquiring Person but prior to the Acquiring Person
becoming the beneficial owner of 50% or more of the Common Stock then
outstanding at an initial exchange ratio of one share of Common Stock (or one
one-hundredth of a share of Preferred Stock) for each Right exchanged.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts). In lieu of
fractions of a share that are not integral multiples of one-hundredth of a share
of Preferred Stock, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock, Common Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _________________, 20__.
Attest INSITUFORM TECHNOLOGIES, INC.
By By:
------------------------------------- --------------------------------
Name: Name:
Title: Title:
Countersigned:
By
---------------------------------------------------
Name:
Title:
B-3
[FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto:________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _____________, 20__
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
-----------------------------------------
The signature of the person(s) signing this Right Certificate
must be guaranteed by a participant in the Securities Transfer Agent's Medallion
Program, the Stock Exchange's Medallion Program or the NYSE, Inc. Medallion
Program.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was, or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________, 20__
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To
----------------------------------------
The undersigned hereby irrevocably elects to exercise ___________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock (or other securities) issuable upon the exercise of such Rights and
requests that certificates for such shares be issued in the name of:
Name:
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
Social Security or
Taxpayer I.D. No.:
-----------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of an delivered to:
Name:
-----------------------------------------
Address:
-----------------------------------------
-----------------------------------------
Social Security or
Taxpayer I.D. No.:
-----------------------------------------
Dated: _______________, 20__
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
The signature of the person(s) signing this Right Certificate
must be guaranteed by a participant in the Securities Transfer Agent's Medallion
Program, the Stock Exchange's Medallion Program or the NYSE, Inc. Medallion
Program.
B-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right 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 any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _________________, 20__.
_______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election
to Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
[Form of Summary of Preferred Stock Purchase Rights]
SUMMARY OF PREFERRED STOCK
PURCHASE RIGHTS
INSITUFORM TECHNOLOGIES, INC.
On February 26, 2002, the Board of Directors of Insituform
Technologies, Inc. (the "Company") declared a dividend distribution of one
Preferred Stock Purchase Right (collectively, the "Rights") for each outstanding
share of common stock, $0.01 par value (collectively, the "Common Stock"), of
the Company (other than shares held in the Company's treasury). The dividend
distribution is payable to the stockholders of record at the close of business
on March 13, 2002 (the "Record Date"). Except as set forth below, each Right,
when exercisable, entitles the registered holder to purchase from the Company
one one-hundredth of a share of a new series of voting preferred stock,
designated as Series A Junior Participating Preferred Stock, $0.10 par value
(the "Preferred Stock"), at a price of $116.00 per one one-hundredth of a share
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Right
Certificates will be distributed. Until the earlier of (i) ten days following
the first to occur of (a) a public announcement that, without the prior written
consent of the Board of Directors of the Company, a person or group of
affiliated or associated person other than the Company, a subsidiary of the
Company, or any employee benefit plan of the Company or a subsidiary of the
Company (an "Acquiring Person") has acquired, or obtained the right to acquire,
outstanding shares of Common Stock of the Company representing 20% or more of
the voting power of the Company or (b) the date on which the Company first has
notice or otherwise determines that a person has become an Acquiring Person (the
"Stock Acquisition Date") or (ii) ten days following the commencement or
announcement of an intention to make a tender offer or exchange offer, without
the prior written consent of the Board of Directors of the Company, for
outstanding shares of such Common Stock representing 20% or more of the voting
power of the Company (the earlier of the dates in clause (i) or (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Company's Common Stock certificates outstanding as of and after the
Record Date (other than shares held in the Company's treasury), by such Common
Stock certificates. The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Company's Common
Stock. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Stock certificates issued after the Record
Date, upon transfer, new issuance or issuance from the Company's treasury of the
Company's 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 of the
Company's Common Stock certificates outstanding as of and after the Record Date
also will constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's Common Stock
as of the close of business on the Distribution Date and such separate
certificates alone will then evidence the Rights.
C-1
Notwithstanding the above, a person will not be deemed to be an
Acquiring Person if such person: (x) becomes the owner of outstanding Shares of
the Common Stock of the Company representing 20% or more of the voting power of
the Company by means of an acquisition of shares of Common Stock directly from
the Company if such acquisition is approved by a majority of the Board of
Directors of the Company (unless such Person was an Acquiring Person prior to
such acquisition); (y) becomes the owner of Common Stock representing 20% or
more of the voting power of the Company following an acquisition of the
Company's voting securities by the Company, unless such person subsequently
acquires additional voting securities of the Company (other than by means of a
stock dividend, stock split, recapitalization or similar event); or (z) has
become an Acquiring Person inadvertently and divests promptly after notification
thereof a number of voting securities so as to no longer be an Acquiring Person.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on March 12, 2012, unless earlier redeemed or exchanged by
the Company, as described below.
The Purchase Price payable, the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights and
the number of Rights outstanding are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification, of the Preferred Stock, (ii) upon the
distribution to holders of Preferred Stock of rights or warrants to subscribe
for shares of Preferred Stock or securities convertible into Preferred Stock at
less than the then current market price of the Preferred Stock, or (iii) upon
the distribution to holders of Preferred Stock of evidences of indebtedness,
cash or assets (excluding regular periodic cash dividends out of earnings or
retained earnings or dividends payable in Preferred Stock) or of convertible
securities subscription rights or warrants (other than those referred to above).
In the event that, following the Distribution Date, the Company
is acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation or in which the Common Stock is
exchanged or changed or 50% or more of the Company's assets or earning power is
sold (in one transaction or a series of transactions), proper provision shall be
made so that each holder of Rights shall thereafter have the right to receive,
in lieu of shares of Preferred Stock, upon the exercise of the Rights and
payment of the Purchase Price of the Rights so exercised, that number of shares
of common stock of the surviving or purchasing company (or, in certain cases,
one of its affiliates) which at the time of such transaction would have a market
value of two times the aggregate Purchase Price of the Rights then exercised by
the holder (such right being called the "Merger Right").
In the event that any person shall become an Acquiring Person, a
proper provision shall be made so that each holder of Rights will thereafter
have the right to receive, in lieu of shares of Preferred Stock, upon exercise
of the Rights and payment of the Purchase Price of the Rights so exercised, that
number of shares (or fractional shares) of Common Stock having a market value of
two times the aggregate Purchase Price of the Rights then exercised by the
holder, subject to the availability of a sufficient number of treasury shares or
authorized but unissued shares (such right being called the "Subscription
Right"). The holder of a Right will continue to have the Merger Right unless and
until such holder exercises the Subscription Right.
Any Rights that are beneficially owned by an Acquiring Person or
an Affiliate or an Associate of an Acquiring Person will become null and void
upon the occurrence of any of the events giving rise to the exercisability of
the Merger Right or the Subscription Right and any holder of such Rights will
have no right to exercise such Rights from and after the occurrence of such an
event insofar as they relate to the Merger Right or the Subscription Right.
C-2
With certain exceptions, no adjustments in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares will be issued. In lieu of
fractional shares, an adjustment in cash will be made based on the market price
of the Preferred Stock or the Common Stock as the case may be on the last
trading date prior to the date of exercise.
At any time prior to a Person becoming an Acquiring Person or
March 12, 2002, the Company's Board of Directors may elect to redeem the Rights
in whole, but not in part, at a price of $0.01 per Right. After a Person becomes
an Acquiring Person and prior to an event giving rise to the Merger Right, the
Company's Board of Directors may also elect to redeem all of the Rights (i)
following a change in a majority of the Directors of the Company through a proxy
solicitation, or (ii) following the Stock Acquisition Date, provided that either
(a) the Acquiring Person reduces its beneficial ownership to less than 20% of
the voting power of the Company in a manner satisfactory to the Board of
Directors and there are no more Acquiring Persons, or (b) such redemption is
incidental to a merger or other business combination involving the Company but
not involving the Acquiring Person. Immediately upon the action of the Board of
Directors electing to redeem the Rights, the Company shall make announcement
thereof, and the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the redemption price.
At any time after a Person becomes an Acquiring Person but prior
to such time that any Person becomes the beneficial owner of 50% or more of the
outstanding shares of the Company's Common Stock, the Company may elect to
effect a full or partial exchange of Rights for the Company's Common Stock at an
initial exchange ratio of one share of Common Stock for each Right exchanged.
Alternatively, the Company may elect to effect the exchange of Rights using
Preferred Stock at an initial exchange ratio of one one-hundredth of a share of
Preferred Stock for each Right exchanged.
The Preferred Stock purchasable upon exercise of the Rights will
be non-redeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential dividend in an amount equal to the
greater of $1.00 per share or 100 times any dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock will
receive a preferred liquidation payment equal to the greater of $1.00 or 100
times the payment made per each share of Common Stock. Each one one-hundredth of
a share of Preferred Stock will have one vote, voting together with the shares
of Common Stock. In the event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the Preferred Stock as to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution provisions. Fractional
shares of Preferred Stock in integral multiples of one one-hundredth of a share
of Preferred Stock will be issuable; however, the Company may elect to
distribute depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one one-hundredth
of a share, 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.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to
C-3
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
C-4
