EXHIBIT 1
SKYMALL, INC.
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 15, 1999
TABLE OF CONTENTS
DESCRIPTION PAGE
1. Certain Definitions................................................. 1
2. Appointment of Rights Agent......................................... 5
3. Issuance of Right Certificates...................................... 5
4. Form of Right Certificates.......................................... 7
5. Countersignature and Registration................................... 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates............. 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights....... 9
8. Cancellation and Destruction of Right Certificates.................. 10
9. Reservation and Availability of Shares of Preferred Stock........... 11
10. Preferred Stock Record Date......................................... 12
11. Adjustments to Number and Kind of Shares, Number of Rights or
Purchase Price...................................................... 12
12. Certification of Adjustments........................................ 21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power............................................................... 21
14. Fractional Rights and Fractional Shares............................. 25
15. Rights of Action.................................................... 26
16. Agreement of Right Holders.......................................... 26
17. Right Certificate Holder Not Deemed a Shareholder................... 27
18. Concerning the Rights Agent......................................... 27
19. Merger or Consolidation or Changed Name of Rights Agent............. 27
20. Duties of Rights Agent.............................................. 28
21. Change of Rights Agent.............................................. 30
22. Issuance of New Right Certificates.................................. 31
23. Redemption.......................................................... 31
24. Exchange of Rights for Common Stock................................. 32
25. Notice of Proposed Actions.......................................... 33
26. Notices............................................................. 35
27. Supplements and Amendments.......................................... 35
28. Successors.......................................................... 35
29. Benefits of this Rights Agreement................................... 35
30. Governing Law....................................................... 35
31. Counterparts........................................................ 35
32. Descriptive Headings................................................ 35
33. Severability........................................................ 35
-i-
RIGHTS AGREEMENT
This Rights Agreement ("Rights Agreement"), is dated as of September
15, 1999, between SkyMall, Inc., a Nevada corporation (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights Agent").
WITNESSETH:
WHEREAS, the Board of Directors of the Company on September 10, 1999
(i) authorized the issuance of and declared a dividend of one right (a "Right")
for each share of the common stock, par value $.001 per share, of the Company
(the "Common Stock") outstanding as of the Close of Business (as such term is
hereinafter defined) on October 15, 1999 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a share of the Series R
Preferred Stock, par value $.001 per share, of the Company (the "Series R
Preferred Stock") having the rights, powers and preferences as 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, and (ii) further authorized
the issuance of one Right with respect to each share of Common Stock of the
Company that shall become outstanding between October 15, 1999, and the
Distribution Date (as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement the following
terms shall have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of fifteen percent (15%) or more of the outstanding Common Stock, without the
prior approval of the Board of Directors; provided, however, that in no event
shall a Person who or which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of less than fifteen percent (15%) of the
Company's outstanding shares of Common Stock, become an Acquiring Person solely
as a result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such Person, provided, however, that if a Person shall
become the Beneficial Owner of fifteen percent (15%) or more of the Company's
outstanding shares of Common Stock then outstanding solely by reason of a
reduction of the number of shares of outstanding Common Stock, and shall
thereafter become the Beneficial Owner of any additional shares of Common Stock
of the Company, then such Person shall be deemed to be an "Acquiring Person"
unless upon the consummation of the acquisition of such additional shares of
Common Stock such person does not own fifteen percent (15%) or more of the
shares of Common Stock then outstanding, and provided further, that an Acquiring
Person shall not include an Exempt Person (as such term is hereinafter defined).
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently (including, without limitation, because (i) such
Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (ii) such
Person was aware of the extent of its Beneficial Ownership but had no actual
knowledge of the consequences of such Beneficial Ownership under this Agreement)
and without any intention of changing or influencing control of the Company, and
such Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an "Acquiring Person" for any
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 Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of any
securities
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (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), whether or not in writing, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, or any comparable or successor
rule), including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," any securities if
the agreement, arrangement or understanding to vote such security (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 (whether or not in
writing) for the purpose of acquiring, holding, voting except as described in
the proviso to clause (B) of subparagraph (ii) of this Section 1(c) or disposing
of any securities of the Company; provided, however, that no Person who is an
officer, director or employee of an Exempt Person shall be deemed, solely by
reason of such Person's status or authority as such, to be the "Beneficial
Owner" of, to have "Beneficial Ownership" of or to "beneficially own" any
securities that are "beneficially owned" (as defined in this Section 1(c)),
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including, without limitation, in a fiduciary capacity, by an Exempt Person or
by any other such officer, director or employee of an Exempt Person.
For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
(d) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "COMMON STOCK" when used with reference to the Company shall
mean the Common Stock, par value $.001 per share, of the Company. "Common Stock"
when used with reference to any Person other than the Company which shall be
organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if such
Person is a Subsidiary of or is controlled by another Person, the Person which
ultimately controls such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits of such Person
and which shall be entitled to exercise the greatest voting power per unit of
such Person.
(g) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(h) "COMPANY" shall have the meaning set forth in the preamble
hereto.
(i) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) hereof.
(j) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a) hereof.
(l) "EXCHANGE ACT" shall have the meaning set forth in Section 1
hereof.
(m) "EXEMPT PERSON" shall mean the Company or any Subsidiary of
the Company, including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee or director stock plan of the Company or of
any Subsidiary of the Company, or any Person, organized, appointed, established
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or holding Common Stock for or pursuant to the terms of any such plan or any
Person funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
(n) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(o) "FLIP-IN EVENT" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(p) "FLIP-IN EXERCISE PAYMENT" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(q) "FLIP-IN TRIGGER DATE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(r) "FLIP-OVER EVENT" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(s) "FLIP-OVER EXERCISE PAYMENT" shall have the meaning set
forth in Section 13(a) hereof.
(t) "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.
(u) "PERSON" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(v) "PREFERRED STOCK" shall mean the Series R Preferred Stock
having the rights, powers and preferences set forth in Exhibit A hereto, and, to
the extent that there is not a sufficient number of shares of Series R Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, par value $.001 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of the Series R
Preferred Stock.
(w) "PREFERRED STOCK EQUIVALENT" shall have the meaning set
forth in Section 11(b) hereof.
(x) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) hereof.
(y) "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.
(z) "RECORD DATE" shall have the meaning set forth in the
Recitals within this Agreement.
(aa) "REDEMPTION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(bb) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.
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(cc) "RIGHT CERTIFICATE" shall have the meaning set forth in
Section 3(a) hereof.
(dd) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(ee) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person.
(ff) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(gg) "SUBSIDIARY" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person and any corporation or other entity that is otherwise controlled by
such Person.
(hh) "SUMMARY OF RIGHTS" shall have the meaning set forth in
Section 3(b) hereof.
(ii) "TRADING DAY" shall have the meaning set forth in Section
11(d) hereof.
(jj) "TRIGGERING EVENT" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
(kk) "VOTING POWER" shall mean the voting power of all securities
of the Company then outstanding and generally entitled to vote for the election
of directors of the Company.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company in its good
faith judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise and shall in no event be
liable for the acts or omissions of any such Co-Rights Agent(s). In the event
the Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agents and any Co-Rights Agents shall be as the Company shall determine.
3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date) or (ii) the
tenth business day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the commencement by any Person (other than an Exempt Person)
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of, or of the first public announcement of the intent of any Person (other than
an Exempt Person) to commence (which intention to commence remains in effect for
five (5) business days after such announcement), a tender or exchange offer upon
the successful consummation of which such Person, together with its Affiliates
and Associates, would be the Beneficial Owner of fifteen percent (15%) or more
of the outstanding Common Stock (irrespective of whether any shares are actually
purchased pursuant to any such offer) (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights; the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Section 3(c) hereof) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock and not by separate Right Certificates, and (y) each Right will
be transferable only in connection with the transfer of a share (subject to
adjustment as hereinafter provided) of Common Stock. As soon as practicable
after the Distribution Date, the Rights Agent will mail, by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company, to
the address of such holder shown on such records, a Right certificate in
substantially the form of Exhibit B hereto (a "Right Certificate") evidencing
one Right for each share of Common Stock so held. As of and after the
Distribution Date the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially in the form attached hereto as Exhibit C (a "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.
(c) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company's
treasury) after the Record Date prior to the earlier of the Distribution Date or
the Expiration Date. With respect to certificates representing such shares of
Common Stock, the Rights will be evidenced by such certificates for Common Stock
registered in the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date (with or without a copy of the Summary of Rights attached thereto),
shall also constitute the surrender for transfer of the Rights associated with
the Common Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, 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
the Rights Agreement between SkyMall, Inc.
("SkyMall") and Continental Stock Transfer & Trust
Company, as Rights Agent, dated as of September
15, 1999, as the same may be amended from time to
time (the "Rights Agreement"), the terms of which
are incorporated herein by reference and a copy of
which is on file at the principal executive office
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of SkyMall. 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. SkyMall
will mail to the holder of this certificate a copy
of the Rights Agreement without charge after
receipt by it of a written request therefor. UNDER
CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, BENEFICIALLY OWNED BY
OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) OR AN ASSOCIATE OR AFFILIATE (AS
DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND
CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing
legend, the Rights associated with the Common Stock represented by such
certificates shall, until the Distribution Date, be evidenced by such
certificates alone, and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the surrender for transfer of
any such certificate shall also constitute the surrender for transfer of the
Rights associated with the Common Stock represented thereby. In the event that
the Company purchases or acquires any shares of Common Stock after the Record
Date but prior to the earlier of the Distribution Date, the Redemption Date or
the Expiration Date, any Rights associated with such shares of Common Stock
shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the shares of Common Stock no longer
outstanding.
Notwithstanding this paragraph (d), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
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), when, as and if
issued, shall be substantially in the form set forth in 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 Rights Agreement, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates evidencing the Rights
issued on the Record Date whenever such certificates are issued, shall be dated
as of the Record Date and the Right Certificates evidencing Rights to holders of
record of Common Stock issued after the Record Date shall be dated as of the
Record Date but shall also be dated to reflect the date of issuance of such
Right Certificate. On their face, Right Certificates shall entitle the holders
thereof to purchase, for each Right, one one-hundredth of a share of Preferred
Stock, or other securities or property as provided herein, as the same may from
7
time to time be adjusted as provided herein, at the price per one one-hundredth
of a share of Preferred Stock of $65.00, as the same may from time to time be
adjusted as provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement,
any Right Certificate that represents Rights that are or were at any time on or
after the earlier of the Stock Acquisition Date or the Distribution Date
beneficially owned by an Acquiring Person or any Affiliate or Associate thereof
(or any transferee of such Rights) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Company or the Rights Agent has knowledge
that such Person is an Acquiring Person or an Associate or Affiliate thereof or
transferee of such Persons or a nominee of any of the foregoing) the following
legend:
The beneficial owner of the Rights represented by
this Right Certificate is an Acquiring Person or
an Affiliate or Associate (as defined in the
Rights Agreement) of an Acquiring Person or a
subsequent holder of such Right Certificates
beneficially owned by such Persons. Accordingly,
this Right Certificate and the Rights represented
hereby are null and void and will no longer be
transferable as provided in the Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or by
facsimile, by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
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;
and any Right Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices designated for such purposes, records
for registration and transfer of the Right Certificates issued hereunder. Such
records 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 date of each of the Right Certificates and the
certificate numbers for each of the Right Certificates.
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6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 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, any Right Certificate
or Certificates (other than Right Certificates representing Rights that have
become void pursuant to Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be (i) transferred or (ii) 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 or
other securities as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer any
Right Certificate shall surrender the Right Certificate at the office of the
Rights Agent designated for such purposes with the form of assignment on the
reverse side thereof duly endorsed (or enclose with such Right Certificate a
written instrument of transfer in form satisfactory to the Company and the
Rights Agent), duly executed by the registered holder thereof or his attorney
duly authorized in writing, and with such signature guaranteed by a member of a
securities approved medallion program. Any registered holder desiring to 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 split up, combined or exchanged at the principal office
of the Rights Agent. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e), 11 and 14 hereof, countersign (by manual or facsimile signature) and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, if requested by the Company, reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will execute and deliver a new Right Certificate of like tenor to the Rights
Agent for delivery to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 11(a)(ii) hereof, the Rights shall become
exercisable, and may be exercised to purchase Preferred Stock, 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 (with such
signature duly guaranteed), to the Rights Agent at Two Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, together with payment of the Purchase Price with respect to each
Right exercised, subject to adjustment as hereinafter provided, at or prior to
the Close of Business on the earlier of (i) October 15, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (such date being herein referred to as the "Redemption Date")
or (iii) the time at which all such Rights are exchanged as provided in Section
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24 hereof (the earliest of (i), (ii) and (iii) being herein referred to as the
"Expiration Date").
(b) The Purchase Price and the number of shares of Preferred
Stock or other securities or consideration to be acquired upon exercise of a
Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof. The Purchase Price shall be payable in lawful money of the
United States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon receipt
of a Right Certificate with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) or so much thereof as is necessary for
the shares to be purchased and an amount equal to any applicable transfer tax,
by cash, certified check or official bank check payable to the order of the
Company or the Rights Agent, the Rights Agent shall, subject to Section 20(k),
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock (or make available if the Rights Agent is the transfer agent) certificates
for the number of shares of Preferred Stock so elected to be purchased and the
Company will comply and hereby authorizes and directs such transfer agent to
comply with all such requests, (ii) requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14(b) hereof, and (iii) promptly after receipt of such Preferred Stock
certificates cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, and, when appropriate, after receipt of the
cash requisitioned from the Company, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event of a
purchase of securities, other than Preferred Stock, pursuant to Section 11(a) or
Section 13 hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii). In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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
10
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any 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.
9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that at all times it will
cause to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other securities)
or held in its treasury, the number of shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities) that, as provided in
this Agreement, including Section 11(a)(iii) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights, provided, however, that
the Company shall not be required to reserve and keep available shares of
Preferred Stock or other securities sufficient to permit the exercise in full of
all outstanding Rights pursuant to the adjustments set forth in Section
11(a)(ii), Section 11(a)(iii) or Section 13 hereof unless, and only to the
extent that, the Rights become exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be reported
by the National Association of Securities Dealers, Inc. Automated Quotations
System ("Nasdaq") or such other system then in use, and if the Preferred Stock
shall become listed on any national securities exchange, to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be listed
on such exchange upon official notice of issuance upon such exercise and (ii) if
then necessary, to permit the offer and issuance of such shares of Preferred
Stock (and, following the occurrence of a Triggering Event, other securities),
register and qualify such shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) under the Securities Act and
any applicable state securities or "blue sky" laws (to the extent exemptions
therefrom are not available), cause such registration statement and
qualifications to become effective as soon as possible after such filing and
keep such registration and qualifications effective until the Expiration Date of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare
and file a registration statement under the Securities Act and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
11
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective.
(c) 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
following the occurrence of a Triggering Event, other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares in
accordance with applicable law.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or other securities, as the case may be) upon
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate, and the Company shall not be required to issue or deliver a
Right Certificate or certificate for Preferred Stock (or other securities, as
the case may be) to a person other than such registered holder until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) 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. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate, as such, shall not be entitled to any rights
of a shareholder of the Company with respect to the 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,
if any, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
11. ADJUSTMENTS TO NUMBER AND KIND OF SHARES, NUMBER OF RIGHTS OR
PURCHASE PRICE. The number and kind of shares subject to purchase upon the
exercise of each Right, the number of Rights outstanding and the Purchase Price
are subject to adjustment from time to time as follows:
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Preferred Stock
payable in shares of Preferred Stock, (B) subdivide or split the outstanding
shares of Preferred Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Preferred Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of Preferred Stock,
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
12
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of capital stock or other securities, which, if such Right had been
exercised immediately prior to such date, the holder thereof would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, at any time after the date of this Agreement, directly
or indirectly, (1) shall consolidate with or merge with and into the Company or
any of its Subsidiaries or otherwise combine with the Company or any of its
Subsidiaries and the Company or such Subsidiary shall be the continuing or
surviving corporation of such consolidation, merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed into or exchanged for stock or other securities of the Company or of
any other Person or cash or any other property, or (2) shall, in one or more
transactions, other than in connection with the exercise of a Right or Rights
and other than in connection with the exercise or conversion of securities
exercisable for or convertible into securities of the Company or of any
Subsidiary of the Company, transfer any assets or property to the Company or any
of its Subsidiaries in exchange (in whole or in part) for any shares of any
class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries, or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its
Subsidiaries or any securities exercisable for or convertible into shares of any
class of capital stock of the Company or any of its Subsidiaries (other than as
part of a pro rata offer or distribution by the Company or such Subsidiary to
all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than as a pro rata
dividend) or dispose, to, from or with, as the case may be, in one transaction
or a series of transactions, the Company or any of its Subsidiaries, assets
(including securities) on terms and conditions less favorable to the Company or
such Subsidiary than the Company or such Subsidiary would be able to obtain in
arm's-length negotiation with an unaffiliated third party, or (4) shall receive
any compensation from the Company or any of its Subsidiaries for services other
than compensation for employment as a regular or part-time employee, or fees for
serving as a director, at rates in accordance with the Company's (or its
Subsidiary's) past practices, or (5) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or tax
advantage provided by the Company or any of its Subsidiaries, or (6) shall
engage in any transaction with the Company (or any of its Subsidiaries)
involving the sale, license, transfer or grant of any right in, or disclosure
of, any patents, copyrights, trade secrets, trademarks, know-how or any other
intellectual or industrial property rights recognized under any country's
13
intellectual property laws which the Company (including its Subsidiaries) owns
or has the right to use on terms and conditions not approved by the Board; or
(B) any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person; or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any reverse stock
split), or any recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries or any other transaction or series
of transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person or any Affiliate or
Associate of such Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than one percent (1%) the proportionate share
of the outstanding shares of any class of equity securities of the Company or
any of its Subsidiaries, or securities exercisable for or convertible into
equity securities of the Company or any of its Subsidiaries, which is directly
or indirectly beneficially owned by any Acquiring Person or any Affiliate or
Associate of any Acquiring Person (any of (A), (B) or (C) being referred to
herein as a "Flip-In Event").
Then upon the first occurrence of such Flip-In Event
(i) the Purchase Price shall be adjusted to be the Purchase Price in effect
immediately prior to the Flip-In Event multiplied by the number of
one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such Flip-In Event, whether or not such Right was then
exercisable, and (ii) each holder of a Right, except as otherwise provided in
this Section 11(a)(ii) and Section 11(a)(iii) hereof, shall thereafter have the
right to receive, upon exercise thereof at a price equal to the Purchase Price
(as so adjusted), in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of Common Stock as shall equal
the result obtained by dividing the Purchase Price (as so adjusted) by fifty
percent (50%) of the Current Market Price per share of the Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon the exercise of a Right shall,
following the Flip-In Event, be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything in this Agreement
to the contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event or (z)
a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-In Event pursuant to
either (I) a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding, whether written or otherwise, regarding the
transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding, whether written or
otherwise, which has the purpose or effect of avoiding the provisions of this
paragraph, and subsequent transferees of such Persons, shall be void without any
further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this Agreement.
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 11(a)(ii) are complied with, but shall have no liability to any
14
holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. From and after the Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become void pursuant to the provisions of
this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be canceled.
(iii) The Company may at its option substitute for a share
of Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market Price
of a share of Common Stock. In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the Company
is a party (A) determine the excess (the "Spread") of (1) the value of the
shares of Common Stock issuable upon the exercise of a Right in accordance with
the foregoing subparagraph (ii) (the "Current Value") over (2) the Purchase
Price (as adjusted in accordance with the foregoing subparagraph (ii)), and (B)
with respect to each Right (other than Rights which have become void pursuant to
the foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing paragraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in
accordance therewith), (1) cash, (2) a reduction in such Purchase Price, (3)
shares of Preferred Stock or other equity securities of the Company, including,
without limitation, shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of Preferred Stock and shares or fractions of shares
of preferred stock being hereinafter referred to as "Common Stock Equivalents"),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in
such Purchase Price), where such aggregate value has been determined by the
Board of Directors upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors; provided, however, that
if the Company shall not make adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the date of the Flip-In Event
(the "Flip-in Trigger Date"), then the Company shall be obligated to deliver, to
the extent permitted by applicable law and any material agreements then in
effect to which the Company is a party, upon the surrender for exercise of a
Right and without requiring payment of such Purchase Price, shares of Common
Stock (to the extent available), and then, if necessary, such number or
fractions of shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock and/or
Common Stock Equivalents could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Flip-In Trigger
Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares of Common Stock or Common Stock
Equivalents (such thirty (30) day period, as it may be extended, being
15
hereinafter referred to as the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the second and/or
third sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to the last sentence of Section 11(a)(ii) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
Section 11(a)(iii) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price per share of the Common Stock on the Flip-In Trigger Date and the
per share or per unit value of any Common Stock Equivalent shall be deemed to
equal the Current Market Price per share of the Common Stock on such date. The
Board of Directors may, but shall not be required to, establish procedures to
allocate the right to receive Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase Preferred Stock (for
a period expiring within forty-five (45) calendar days after such record date),
shares having the same rights, privileges and preferences as the Preferred Stock
(a "Preferred Stock Equivalent") or securities convertible into Preferred Stock
or a Preferred Stock Equivalent at a price per share of Preferred Stock or a
Preferred Stock Equivalent (or having a conversion price per share, if a
security convertible into Preferred Stock or a Preferred Stock Equivalent) less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record 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 offering price of the total number of shares of
Preferred Stock and/or a Preferred Stock Equivalent (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of 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 price may be paid by delivery of consideration part or all of which
is in a form other than cash, the value of such non-cash consideration shall be
as determined in good faith by 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.
(c) In case the Company shall fix a record date for 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 corporation) of evidences of indebtedness, cash, assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock
16
other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such Current Market Price per 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 be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per share
of the Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of the Common Stock of (i) any dividend
or distribution on the Common Stock (other than a regular quarterly cash
dividend and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification occurs, then,
and in each such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted sale price or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use,
or, if on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors shall be used and shall be binding on the
Rights Agent. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
17
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share shall mean the fair value per
share as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose 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(d) (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(d), the "Current Market Price" per
share of Preferred Stock shall be conclusively deemed to be an amount equal to
one hundred (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 nor the Preferred Stock is publicly held or so
listed or traded, "Current Market Price" per shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-hundred-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
18
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-hundredths of a share of Preferred Stock (calculated to the nearest
one-hundred-thousandth) obtained by (i) multiplying (x) the number of
one-hundredths of a share of Preferred Stock covered by a Right immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised made pursuant to Sections 11(a)(i),
11(b) or 11(c), to adjust the number of Rights in lieu of any adjustment in the
number of shares of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of shares of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one hundred-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
ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) 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 per share and the number of shares which
were expressed in the initial Right Certificate issued hereunder.
(k) 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, Preferred Stock or other capital stock issuable upon exercise of
the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required shareholder approvals, which may, in the
19
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock, Preferred
Stock or other capital stock 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.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable 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 of Preferred Stock and other capital stock or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly permitted or required by this Section
11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance for cash of
any shares of Preferred Stock at less than the Current Market Price, (iii)
issuance for cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of Preferred Stock, (iv)
stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person, (ii)
merge with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, if (x) at the time of or immediately
after such consolidation, merger or sale there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect which substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates. The Company shall not consummate any such consolidation, merger or
sale unless prior thereto the Company and such other Person shall have executed
and delivered to the Rights Agent a supplemental agreement evidencing compliance
with this subsection.
20
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Record Date and prior
to the Distribution Date (i) declare or pay any dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
equals the result obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by a fraction, the
numerator or which shall be the number of shares of Common Stock outstanding
immediately prior to the occurrence of such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately following
the occurrence of such event.
12. CERTIFICATION OF ADJUSTMENTS. Whenever an adjustment is made as
provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare a
certificate signed by its Chief Executive Officer, its President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company setting forth such adjustment and a brief
statement of the facts giving rise to 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 (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 26 hereof. Notwithstanding the foregoing sentence, the failure of
the Company to give such notice shall not affect the validity of or the force or
effect of or the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any certificate prepared by the Company pursuant
to Sections 11 and 13 and on any adjustment therein contained and shall not be
deemed to have knowledge of any such adjustment unless and until it shall have
received such certificate. Any adjustment to be made pursuant to Sections 11 and
13 of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that following the first occurrence of a Flip-In
Event, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person or Persons and the Company, as the case maybe,
shall not be the surviving or continuing corporation of such consolidation or
merger, or (y) any Person or Persons shall consolidate with, or merge with and
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or of the Company or cash or any other property, other than, in the case
of the transactions described in subparagraphs (x) or (y), a merger or
consolidation which would result in all of the Voting Power represented by the
21
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) all of the Voting Power represented by the securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such transactions, or (z) the Company or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer to any other Person or
any Affiliate or Associate of such Person, in one transaction, or a series of
related transactions, assets or earning power aggregating more than fifty
percent (50%) of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event (a
"Flip-Over Event"), proper provision shall be made so that (i) each holder of a
Right (other than Rights which have become void pursuant to Section 11(a)(ii)
hereof) shall thereafter have the right to receive, upon the exercise thereof at
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock or Common Stock of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by fifty
percent (50%) of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) and the number of shares of Common Stock of such Principal
Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Flip-Over Event, all the obligations and duties of the Company pursuant to
this Rights Agreement; (iii) the term "Company" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only apply
to such Principal Party following the first occurrence of a Flip-Over Event; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
22
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y)
of the first sentence of Section 13(a) hereof, (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, or, if there is more than one such issuer, the
issuer the Common Stock of which has the greatest aggregate market value or (B)
if no securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives said merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the merger
or consolidation does not survive the merger or consolidation, the Person that
does survive the merger or consolidation (including the Company if it survives);
and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons that is
the issuer of Common Stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing paragraphs
(b)(i) or (b)(ii), (1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the joint venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Rights Agreement as the same shall
have been assumed by the Principal Party pursuant to Sections 13(a) and (b)
hereof and further providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party at its own expense
shall:
23
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the date of expiration of the Rights,
and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange, to list
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchased upon exercise of the Rights to be
reported by Nasdaq or such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to be a
party to a transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its Certificate of Incorporation or Bylaws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
24
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 holders of record 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 then
current market value of a whole Right. For the purposes of this Section 14(a),
the then current market value of a Right shall be determined in the same manner
as the Current Market Price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock or Preferred Stock Equivalents (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 or Preferred Stock Equivalents (other
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 or Preferred Stock
Equivalents 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 or Preferred Stock Equivalents represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock or Preferred Stock
Equivalents that are not integral multiples of one one-hundredth of a share of
Preferred Stock or a Preferred Stock Equivalent, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-hundredth of a share of Preferred Stock or a Preferred
Stock Equivalent. For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock or Preferred Stock Equivalent
shall be the Current Market Price of a share of Common Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the Company
shall not be required to issue fractions of shares or units of Common Stock or
Common Stock Equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such Common Stock or
Common Stock Equivalents or other securities. In lieu of fractional shares or
units of such Common Stock or 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 or
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(d) hereof for the Trading Day immediately prior to the date of such exercise
and, if such Common Stock Equivalent is not traded, each such Common Stock
Equivalent shall have the value of one one-hundredth of a share of Preferred
Stock.
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares upon
exercise of a Right.
25
15. RIGHTS OF ACTION. As of the Record Date, all rights of action in
respect of this Agreement, other than any rights of action vested in the Rights
Agent pursuant to Sections 18 and 20 below, are vested in the respective holders
of record of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company or any other Person 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,
accordingly, that they 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.
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 not be
evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name 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 Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
26
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder of a
Right, as such, shall be entitled to vote, receive dividends in respect of or be
deemed for any purpose to be the holder of Common Stock or any other securities
of the Company which may at any time be issuable upon the exercise of the
Rights, 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 shareholder of the Company or any right to vote in the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in Section 25 hereof), or to receive dividends or subscription rights in respect
of any such stock or securities, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for any thing done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the expiration of the Rights and the termination of this
Rights Agreement. Anything in this agreement to the contrary notwithstanding, 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 damage and regardless of the form of action.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon any
Right Certificate, certificate for Common Stock or 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, guaranteed, verified or acknowledged, by the proper Person or
Persons.
19. MERGER OR CONSOLIDATION OR CHANGED NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
27
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver such 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
Certificate shall have the full force provided in the Right Certificates and in
this Rights Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Rights Agreement 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) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Current Market Price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by certificate signed by the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
28
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11, 13, 23 or 24 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 receipt of a
Certificate furnished pursuant to Section 12 describing 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 Common Stock to
be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any shares of Common Stock 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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or 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 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 Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. Subject to Section 20(c)
hereof, the Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five (5) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other 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
29
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 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 contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without first
consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Rights Agreement
upon thirty (30) days' notice in writing, or such earlier period as shall be
agreed to in writing, mailed to the Company and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon thirty (30) days' notice in
writing, or such earlier period as shall be agreed to 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 by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of thirty (30) days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the incumbent Rights Agent or the holder of record of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or any State thereof, in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by 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; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
30
predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price per share 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 Rights Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (x) the first occurrence of a Flip-In Event or
(y) the Close of Business on the Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $0.001 per Right, as
such amount may be 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").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within ten (10) days after such action of the Board of Directors ordering the
redemption of the Rights (or such later time as the Board of Directors may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
31
of redemption shall state the method by which the payment of the Redemption
Price will be made. The failure to give notice required by this Section 23(b) or
any defect therein shall not affect the legality or validity of the action taken
by the Company.
(c) In the case of a redemption permitted under Section 23(a),
the Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption of
the Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Right Certificates shall be null and void without any further action
by the Company.
24. EXCHANGE OF RIGHTS FOR COMMON STOCK.
(a) The Board of Directors of the Company may, at its option, at
any time after the occurrence of a Flip-In Event, exchange all or part of the
then outstanding and exercisable Rights (which (i) shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) and (ii) shall
include, without limitation, any Rights issued after the Distribution Date in
accordance with Section 22) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof 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 an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of shares of Common Stock aggregating fifty
percent (50%) or more of the shares of Common Stock then outstanding. From and
after the occurrence of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a).
(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 shares of 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 11(a)(ii) hereof) held by each holder of Rights.
32
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute, and, in the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall substitute to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon exchange of a Right,
a number of shares of Preferred Stock Equivalents, or fractions thereof, having
an aggregate current per share market price (determined pursuant to Section
11(d) hereof) equal to the current per share market price of one share of Common
Stock (determined pursuant to Section 11(d) hereof) as of the date of the
Flip-In Event.
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph (d),
the current market value of a whole share of Common Stock shall be the Current
Market Price of a share of Common Stock (as defined in Section 11(d) hereof for
the purposes of computations made other than pursuant to Section 11(a)(iii)) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
to pay any dividend to the holders of record of its Preferred Stock payable in
stock of any class or to make any other distribution to the holders of record of
its Preferred Stock (other than a regular periodic cash dividend), or (ii) to
offer to the holders of record of its Preferred Stock or options, warrants, or
other rights to subscribe for or to purchase shares of Preferred Stock
(including any security convertible into or exchangeable for Preferred Stock) or
shares of stock of any other class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, or (iv) to effect any consolidation or merger
with or into, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than fifty percent (50%) of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 26 hereof, notice of
such proposed action, which shall specify the record date for the purposes of
such transaction referred to in Section 11(a)(i), or such dividend or
distribution, or the date on which such reclassification, recapitalization,
reorganization, consolidation, merger, sale or transfer of assets, liquidation,
dissolution or winding up is to take place and the record date for determining
participation therein by the holders of record of Preferred Stock, if any such
33
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least ten (10) days prior to the record
date for determining holders of record of the Preferred Stock for purposes of
such action, and in the case of any such other action, at least ten (10) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of record of Preferred Stock, whichever
shall be the earlier.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any such
case, the Company shall give to each holder of Rights, in accordance with
Section 26 hereof, notice of the proposal of such transaction at least ten (10)
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
(c) 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.
26. NOTICES. Notices or demands authorized by this Rights Agreement
to be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on behalf of the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
SkyMall, Inc.
0000 X. Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxx
General Counsel & Secretary
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Continental Stock Transfer & Trust Company
Two Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Compliance Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right 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 it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
34
27. SUPPLEMENTS AND AMENDMENTS. Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Agreement in
any respect without the approval of any holders of the Rights. At any time when
the Rights are no longer redeemable, except as provided in the penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Right Certificates in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any
time period hereunder, or (iv) change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable; provided that no
such supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), and no such amendment may cause the Rights again to
become redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this Rights
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
28. SUCCESSORS. All of the covenants and provisions of this Rights
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.
29. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to 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 Rights Agreement; but this Rights Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
30. GOVERNING LAW. This Rights Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Nevada and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made solely
by residents of such state and performed entirely within such state.
31. COUNTERPARTS. This Rights 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.
32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
33. SEVERABILITY. If any term, provision, covenant or restriction of
this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the terms,
35
provisions, covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, and their seals affixed and attested, all as of
the date and year first above written.
SKYMALL, INC.
[SEAL] By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
President
ATTEST:
By: /s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxxxx X. Xxxxxxxx
Secretary
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------
By: /s/ Xxxxxxxx Xxxxxxxx
-------------------------------------
Title: Assistant Secretary
------------------------------
36
EXHIBIT A
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND TERMS
OF THE SERIES A PREFERRED STOCK
OF
SKYMALL, INC.
Pursuant to Section 78.1955 of the Nevada Revised Statutes:
We, the President and the Secretary, respectively, of SkyMall, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Nevada (the "Corporation"), in accordance with the provisions of
Section 78.1955 thereof, DO HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors
by the Articles of Incorporation of the Corporation, on September 10, 1999 the
Board of Directors adopted the following resolution creating a series of 500,000
shares of Preferred Stock designated as Series R Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the
provisions of its Second Restated Certificate of
Incorporation, as amended, a series of Preferred Stock of
the Corporation be and it hereby is 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. The shares of such
series shall be designated as "Series R Preferred Stock"
(the "Series R Preferred Stock"), $.001 par value per share,
and the number of shares constituting such series shall be
500,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The dividend rate on the shares of Series R
Preferred Stock shall be for each quarterly dividend
(hereinafter referred to as a "quarterly dividend period"),
which quarterly dividend periods shall commence on January
1, April 1, July 1 and October 1 each year (each such date
being referred to herein as a "Quarterly Dividend Payment
Date") (or in the case of original issuance, from the date
of original issuance) and shall end on and include the day
next preceding the first date of the next quarterly dividend
period, at a rate per quarterly dividend period (rounded to
the nearest cent) equal to the greater of (a) $250.00 or (b)
subject to the provisions for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash
dividends, plus 100 times the aggregate per share amount
(payable in cash, based upon the fair market value at the
time the non-cash dividend or other distribution is declared
as determined in good faith by the Board of Directors) of
all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision
of the outstanding shares of Common Stock (by
reclassification or otherwise), declared (but not withdrawn)
on the Common Stock, par value $.001 per share, of the
Corporation (the "Common Stock") during the immediately
preceding quarterly dividend period, or, with respect to the
first quarterly dividend period, since the first issuance of
any share or fraction of a share of Series R Preferred
Stock. In the event this Company shall at any time after
October 15, 1999 (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which
holders of shares of Series R 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) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series R Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series R Preferred Stock, unless the
date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
Series R 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 R 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 R Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be no more than 45 days prior to the date fixed for
the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of
Series R Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series R Preferred Stock shall
entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of
shares of Series R Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the
Certificate of Incorporation or by law, the holders of
shares of Series R Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the
Corporation.
(C) Except as set forth herein, in the Certificate of
Incorporation and in the Bylaws, holders of Series R
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.
2
Section 4. REACQUIRED SHARES. Any shares of Series R
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth
herein.
Section 5. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) In the event of any voluntary liquidation,
dissolution or winding up of the Corporation, the holders of
the Series R Preferred Stock shall be entitled to receive
the greater of (a)$6,500.00 per share, plus accrued
dividends to the date of distribution, whether or not earned
or declared, or (b)an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to
holders of Common Stock. In the event the Corporation shall
at any time after the Rights Declaration Date (i)declare any
dividend on Common Stock payable in shares of Common Stock,
(ii)subdivide the outstanding Common Stock, or (iii)combine
the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders
of shares of Series R Preferred Stock were entitled
immediately prior to such event pursuant to 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.
Section 6. CONSOLIDATION, MERGER, ETC. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any
such case the shares of Series R Preferred Stock shall at
the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In
the event the Corporation shall at any time after the Rights
Declaration Date (i)declare any dividend on Common Stock
payable in shares of Common Stock, (ii)subdivide the
outstanding Common Stock, or (iii)combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series R
Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 7. NO REDEMPTION. The shares of Series R
Preferred Stock shall not be redeemable.
Section 8. FRACTIONAL SHARES. Series R Preferred Stock
may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all
other rights of holders of Series R Preferred Stock. All
payments made with respect to fractional shares hereunder
shall be rounded to the nearest whole cent.
3
Section 9. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series R 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 R Preferred Stock
outstanding shall have been paid in full, the Corporation
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 R 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 R Preferred Stock, except
dividends paid ratably on the Series R Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series R Preferred Stock, provided that
the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series R Preferred Stock;
or
(iv) purchase or otherwise acquire for
consideration any shares of Series R Preferred Stock, or any
shares of stock ranking on a parity with the Series R
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 Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section
9, purchase or otherwise acquire such shares at such time
and in such manner.
Section 10. RANKING. The Series R Preferred Stock shall
be junior to all other Series of the Corporation's preferred
stock as to the payment of dividends and the distribution of
assets, unless the terms of any series shall provide
otherwise.
Section 11. AMENDMENT. The Articles of Incorporation of
the Corporation shall not be amended in any manner which
would materially alter or change the powers, preferences or
special rights of the Series R Preferred Stock so as to
affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of
Series R Preferred Stock voting together as a single class.
4
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this _____
day of _________, 1999.
SKYMALL, INC.
[SEAL]
By: ________________________________
Xxxxxx X. Xxxxxxx
President
ATTEST:
By: _____________________________
Xxxxxxxxx X. Xxxxxxxx
Secretary
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
____________, 1999 by XXXXXX X. XXXXXXX, President of SKYMALL, INC., a Nevada
corporation, for an on behalf of the Corporation.
___________________________________
Notary Public
My commission expires:
_____________________
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this _____ day of
____________, 1999 by XXXXXXXXX X. XXXXXXXX, Secretary of SKYMALL, INC., a
Nevada corporation, for an on behalf of the Corporation.
___________________________________
Notary Public
My commission expires:
_____________________
5
EXHIBIT B
[FORM OF FRONT SIDE OF RIGHT CERTIFICATE]
Certificate No. R-_____ __________ Rights
NOT EXERCISABLE AFTER OCTOBER 15, 2009, OR EARLIER IF REDEEMED OR EXCHANGED. AT
THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $.001 PER RIGHT OR
EXCHANGED FOR PREFERRED STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN
THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON
WHO IS AN ACQUIRING PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED
BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL
BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SKYMALL, INC.
RIGHT CERTIFICATE
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 September 15, 1999 ("Rights Agreement") between
SkyMall, Inc., a Nevada corporation (the "Company"), and Continental Stock
Transfer & Trust Company (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m. (New York time) on October 15, 2009 at the
principal office of the Rights Agent, or its successors as Rights Agent,
designated for such purposes, one one-hundredth of a fully paid and
nonassessable share of Series R Preferred Stock of the Company ("Preferred
Stock") at a purchase price of $65.00 per one one-hundredth of a share, as the
same may from time to time be adjusted in accordance with the Rights Agreement
("Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer be
transferable and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are 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 of record 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, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined in
the Rights Agreement) or (ii) the Expiration Date (as such term is defined in
the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right. Subject
to the provisions of the Rights Agreement, the Company may, at its option, at
any time after a Flip-In Event, exchange all or part of the Rights evidenced by
this Certificate for shares of the Company's Common Stock or for Preferred Stock
(or shares of a class or series of the Company's preferred stock having the same
rights, privileges and preferences as the Preferred Stock).
In the event (i) any person or group becomes an Acquiring Person or
(ii) any of the types of transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock, the
Board may require all or any portion of the outstanding Rights (other than
Rights owned by such Acquiring Person which have become void) to be exchanged
for Common Stock on a pro rata basis, at an exchange ratio of one share of
Common Stock or one one-hundredth of a share of Preferred Stock (or of a share
of a class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
No fractional shares of Preferred Stock shall be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the option of the Company, be evidenced by depositary receipts), and no
fractional shares of Common Stock will be issued upon the exchange of any Right
or Rights evidenced hereby, and in lieu thereof, as provided in the Rights
Agreement, fractions of shares of Preferred Stock or Common Stock shall receive
an amount in cash equal to the same fraction of the then Current Market Price
(as such term is defined in the Rights Agreement) of a share of Preferred Stock
or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of 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
shareholder of the Company or any right to vote in the election of directors, or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting shareholders (other than certain actions specified in
the Rights Agreement) or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ______________, 19__.
SKYMALL, INC.
[SEAL] By: ________________________________
Xxxxxx X. Xxxxxxx
President
ATTEST:
By: _____________________________
Xxxxxxxxx X. Xxxxxxxx
Secretary
COUNTERSIGNED:
Continental Stock Transfer & Trust Company
As Rights Agent
By: ______________________________________
Authorized Officer
[FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
any or all of the Rights represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other identifying number of transferee)
__________________________________ (_____) of the Rights represented by this
Right Certificate, together with all right, title and interest in and to said
Rights, and hereby irrevocably constitutes and appoints
_________________________________ attorney to transfer said Rights on the books
of the within-named Company with full power of substitution.
Dated: _________________, _____. ___________________________________
(Signature)
Signature Guaranteed:
___________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person (as such capitalized terms are defined in 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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated: _________________, _____. ___________________________________
(Signature)
Signature Guaranteed:
___________________________________
NOTICE
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a participant in a Securities
Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise
any or all of the Rights represented by this Right Certificate)
To: SkyMall, Inc.
The undersigned hereby irrevocably elects to exercise _____________________
(_______) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such securities
and any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other identifying number of issuee)
The undersigned hereby further requests that if said number of Rights shall
not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
(Name, address and social security or other identifying number of issuee)
Dated: _________________, _____. ___________________________________
(Signature)
Signature Guaranteed:
___________________________________
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 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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated: _________________, _____. ___________________________________
(Signature)
Signature Guaranteed:
___________________________________
NOTICE
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not executed, with signature
guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SKYMALL, INC.
SUMMARY OF TERMS OF
RIGHTS AGREEMENT
NATURE OF RIGHT: When exercisable, each Right (a "Right") will initially
entitle the holder to purchase one one-hundredth of a share
of Series R Preferred Stock ("Preferred Stock") of SkyMall,
Inc. (the "Company").
MEANS OF The Rights will be distributed to holders of the Company's
DISTRIBUTION: outstanding Common Stock as a dividend of one Right for each
share of Common Stock. The Rights will also be attached to
all future issuances of Common Stock prior to the
Distribution Date (as defined below).
EXERCISABILITY: Rights become exercisable on the earlier of: (i) the tenth
day following the date of public announcement by the Company
or by any person or group (an "Acquiring Person") that such
person or group has acquired beneficial ownership of 15% or
more of the Company's outstanding Common Stock, or (ii) the
tenth business day (unless extended by the Board prior to
the time a person becomes an Acquiring Person) following the
commencement, or announcement of an intention to commence,
by any person or group of a tender or exchange offer which
would result in such person owning 15% or more of the
outstanding Common Stock of the Company (the earlier of such
dates being referred to as the "Distribution Date"),
provided that an Acquiring Person does not include an Exempt
Person (as such term is defined in the Rights Agreement).
Rights will trade separately from the Common Stock once the
Rights become exercisable.
EXERCISE PRICE: $65.00 per Right, which is the amount that in the judgment
of the Board of Directors represents the long-term value of
the Common Stock over the term of the Rights Agreement (the
"Exercise Price").
TERM: The Rights will expire upon the earlier of (i) ten years
after the date of issuance, or October 15, 2009 or (ii)
redemption or exchange by the Company as described below.
REDEMPTION OF Rights are redeemable at a price of $0.001 per Right, by the
RIGHTS: vote of the Company's Board of Directors, at any time until
the occurrence of a Flip-In Event (defined below).
PREFERRED STOCK: The Preferred Stock purchasable upon exercise of the Rights
will be nonredeemable and junior to any other series of
preferred stock the Company may issue (unless otherwise
provided in the terms of such other series). Each share of
Preferred Stock will have a preferential cumulative
quarterly dividend in an amount equal to the greater of (a)
$250.00 or (b) 100 times the 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 (a) $6,500.00 per share, plus
accrued dividends to the date of distribution whether or not
earned or declared, or (b) an amount per share equal to 100
times the aggregate payment to be distributed per share of
Common Stock. Each share of Preferred Stock will have 100
votes, 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 for or changed
into other securities, cash and/or other property, 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 (in integral
multiples of one one-hundredth) 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. Because of the nature of the Preferred Stock's
dividend, liquidation and voting rights, the value of one
one-hundredth of a share of Preferred Stock purchasable upon
exercise of each Right should approximate the value of one
share of Common Stock.
RIGHTS IN EVENT OF In the event that an Acquiring Person engages in certain
SELF-DEALING self-dealing transactions with the Company, or a Person
TRANSACTION OR becomes the beneficial owner of 15% or more of the
ACQUISITION OF outstanding Common Stock ("Flip-In Events"), a holder of a
SUBSTANTIAL AMOUNT Right thereafter has the right to purchase, upon payment of
OF COMMON STOCK: the then current Exercise Price, in lieu of one
one-hundredth of a share of Preferred Stock, such number of
shares of Common Stock having market value at the time of
the transaction equal to the Exercise Price divided by
one-half the Current Market Price (as defined in the Rights
Agreement) of the Common Stock. Notwithstanding the
foregoing, Rights held by the Acquiring Person or any
Associate or Affiliate thereof or certain transferees will
be null and void and no longer be transferable.
2
Self-dealing transactions are defined to include a
consolidation, merger or other combination of an Acquiring
Person with the Company in which the Company is the
surviving corporation, the transfer of assets to the Company
in exchange for securities of the Company, any other
acquisition of securities of the Company by an Acquiring
Person (other than in a pro rata distribution to all
shareholders), the sale, purchase, transfer, distribution,
lease, mortgage, pledge or acquisition of assets by the
Acquiring Person to, from or with the Company on other than
an arm's length basis, compensation to an Acquiring Person
for services (other than for employment as a regular or
part-time employee or director on a basis consistent with
the Company's past practice), a loan or provision of other
financial assistance (except proportionately as a
shareholder) to an Acquiring Person or the licensing, sale
or other transfer of proprietary technology or know-how from
the Company to the Acquiring Person on terms not approved by
the Board of Directors or a reclassification,
recapitalization or other transaction with the effect of
increasing by more than 1% the Acquiring Person's
proportionate share of any class of securities of the
Company.
RIGHTS IN EVENT If, following the occurrence of a Flip-In Event, the Company
OF BUSINESS is acquired by any person in a merger or other business
COMBINATION: combination transaction in which the Common Stock is
exchanged or converted or in which the Company is not the
surviving corporation, or 50% or more of its assets or
earnings power are sold to any person, each holder of a
Right (other than an Acquiring Person, or Affiliates or
Associates thereof) shall thereafter have the right to
purchase, upon payment of the then current Exercise Price,
such number of shares of common stock of the acquiring
company having a current market value equal to the Exercise
Price divided by one-half the Current Market Price of such
common stock.
EXCHANGE OPTION: In the event (i) any person or group becomes an Acquiring
Person or (ii) any of the types of transactions,
acquisitions or other events described above as self-dealing
transactions occur, and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of
Common Stock, the Board may require all or any portion of
the outstanding Rights (other than Rights owned by such
Acquiring Person which have become void) to be exchanged for
Common Stock on a pro rata basis, at an exchange ratio of
one share of Common Stock or one one-hundredth of a share of
Preferred Stock (or of a share of a class or series of the
Company's Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to
adjustment).
FRACTIONAL SHARES: No fractional shares of Common Stock will be issued upon
exercise of the Rights and, in lieu thereof, a payment in
cash will be made to the holder of such Rights equal to the
same fraction of the current market value of a share of
Common Stock.
3
ADJUSTMENT: The Exercise Price payable, and the number of shares of
Preferred Stock or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant
to holders of the Preferred Stock of certain rights or
warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the
Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets
(excluding dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred
to above). The number of Rights associated with each share
of Common Stock is also subject to adjustment in the event
of a stock split of the Common Stock or a stock dividend on
the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
RIGHTS AS The Rights themselves do not entitle the holder thereof to
SHAREHOLDER: any rights as a shareholder, including, without limitation,
voting rights or to receive dividends.
AMENDMENT OF Until the Rights become nonredeemable, the Company may,
RIGHTS: except with respect to the redemption price, amend the
Agreement in any manner. After the Rights become
nonredeemable, the Company may amend the Agreement to cure
any ambiguity, to correct or supplement any provision which
may be defective or inconsistent with any other provisions,
to shorten or lengthen any time period under the Rights
Agreement, or to change or supplement any provision in any
manner the Company may deem necessary or desirable, provided
that no such amendment may adversely affect the interests of
the holders of the Rights (other than the Acquiring Person
or its Affiliates or Associates) or cause the Rights to
again be redeemable or the Agreement to again be freely
amendable.
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE COMPANY.
REQUESTS SHOULD BE DIRECTED TO SKYMALL, INC., 0000 XXXX XXXX XXXXXX, XXXXXXX,
XXXXXXX 00000, ATTENTION: SECRETARY. THIS SUMMARY DESCRIPTION OF THE RIGHTS
AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE RIGHTS AGREEMENT, AS AMENDED FROM TIME TO TIME, WHICH IS
INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.
4
