================================================================================
TII INDUSTRIES, INC.
and
XXXXXX TRUST & SAVINGS BANK
RIGHTS AGREEMENT
Dated as of May 15, 1998
================================================================================
TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions.............................................................................1
SECTION 2. Appointment of Rights Agent.....................................................................4
SECTION 3. Issue of Right Certificates.....................................................................4
SECTION 4. Form of Right Certificates......................................................................6
SECTION 5. Countersignature and Registration...............................................................7
SECTION 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, ..................
Destroyed, Lost or Stolen Right Certificates....................................................7
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................8
SECTION 8. Cancellation and Destruction of Right Certificates..............................................9
SECTION 9. Reservation and Availability of Preferred Shares...............................................10
SECTION 10. Common Stock Record Date.......................................................................11
SECTION 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.............................11
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................18
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................18
SECTION 14. Fractional Rights and Fractional Shares........................................................20
SECTION 15. Rights of Action...............................................................................21
SECTION 16. Agreement of Right Holders.....................................................................22
SECTION 17. Right Certificate Holder Not Deemed a Stockholder..............................................22
SECTION 18. Concerning the Rights Agent....................................................................22
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent......................................23
SECTION 20. Duties of Rights Agent.........................................................................23
SECTION 21. Change of Rights Agent.........................................................................26
SECTION 22. Issuance of New Right Certificates.............................................................26
SECTION 23. Redemption and Termination.....................................................................27
SECTION 24. Exchange.......................................................................................27
SECTION 25. Notice of Certain Events.......................................................................28
SECTION 26. Notices........................................................................................29
SECTION 27. Supplements and Amendments.....................................................................30
SECTION 28. Successors.....................................................................................30
SECTION 29. Determinations and Actions by the Board of Directors...........................................30
SECTION 30. Benefits of this Agreement.....................................................................31
SECTION 31. Severability...................................................................................31
SECTION 32. Governing Law..................................................................................31
SECTION 33. Counterparts...................................................................................31
SECTION 34. Descriptive Headings...........................................................................32
EXHIBIT A - Certificate of Designation of Series D Junior Participating
Preferred Stock
EXHIBIT B - Form of Right Certificate
EXHIBIT C - Summary of Rights
-i-
RIGHTS AGREEMENT
Rights Agreement, dated as of May 15, 1998 (as the same may be
modified, amended, supplemented and/or restated from time to time, this
"Agreement"), between TII Industries, Inc., a Delaware corporation (the
"Company"), and Xxxxxx Trust and Savings Bank, a Illinois corporation, as Rights
Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend distribution of one Right for each share of Common Stock of the Company
outstanding as of the Opening of Business (as such terms are hereinafter
defined) on May 21, 1998 (the "Record Date"), and has further authorized (i) the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Opening of Business on the Record Date and the
earliest of the Distribution Date (as such term is defined in Section 3), the
Redemption Date and the Final Expiration Date (as such terms are defined in
Section 7) and (ii) in certain circumstances provided in Section 22, the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Distribution Date and the earlier of the
Redemption Date and the Final Expiration Date, each Right initially representing
the right to purchase one one-thousandth of a share of a Preferred Share, upon
the terms and subject to the conditions herein set forth (the "Rights").
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding,
but shall not include any Exempt Person or any Grandfathered Stockholders (as
each term is hereinafter defined). Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of beneficial
ownership of shares of Common Stock by the Company that, by reducing the number
of shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) outstanding, increases the percentage of shares of
Common Stock beneficially owned by such Person (together with all Affiliates and
Associates of such Person) to 20% or more of the shares of Common Stock then
outstanding; provided, however, that if any Person (other than Exempt Persons)
(together with all Affiliates and Associates of such Person) shall become the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding
by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional shares
of Common Stock of the Company, then such Person shall be an "Acquiring Person."
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 first sentence of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so
1
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,
solely as a result of such inadvertent acquisition, be deemed to be an
"Acquiring Person" for any purpose 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
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as such rule is in effect on the Record Date.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own," and shall be deemed to have "beneficial
ownership" of, any securities:
(i) that 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 (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 (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (2)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (3) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering
Event, if such Rights were acquired by such Person or such Person's
Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(a) or Section 22 or pursuant to Section 11(a)(i) in
connection with an adjustment made with respect to any of the Rights
heretofore specified in this clause (3); or
(B) the right to vote or otherwise has "beneficial
ownership" (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), 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, pursuant to this
subparagraph (B), any security as a result of any agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D or
Schedule 13G under the Exchange Act (or any comparable or successor
report); or
(ii) that are beneficially owned, including pursuant to
subparagraphs (i)(A) and (B) of this subsection (c), directly or
indirectly, by any other Person (or Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or
2
Associates has any agreement, arrangement or understanding (whether or
not in writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the provision in
subparagraph (i)(B) of this subsection (c)) or disposing of any
securities of the Company;
provided, however, that nothing in this subsection (c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(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 City time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the shares of Common Stock, par value $0.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such Person or, if such Person is a Subsidiary of another Person, the Person
or Persons that ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3.
(h) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company or (iv) any entity holding shares of Common Stock
for or pursuant to the terms of any such plan.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(j) "Opening of Business" on any given date shall mean 9:00 A.M.,
New York City time, on such date; provided, however, that if such date is not a
Business Day, it shall mean the Close of Business on the immediately preceding
Business Day.
(k) "Person" shall mean any individual, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(l) "Preferred Share" shall mean the Series D Junior Participating
Preferred Stock of the Company, par value $1.00 per share, having the relative
rights, preferences and limitations set forth in the form of Certificate of
Designation attached to this Agreement as Exhibit A.
(m) "Redemption Date" shall have the meaning set forth in Section
7.
3
(n) "Section 11(a)(ii) Event" shall mean the event described in
Section 11(a)(ii).
(o) "Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(p) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(q) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(r) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable 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. In the event
the Company appoints one or more co-Rights Agents, the respective duties of the
Rights Agent and any co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth day after the Stock Acquisition Date or (ii)
the Close of Business on the tenth Business Day (or such later date as the Board
of Directors shall determine) after the date of the commencement by any Person
(other than an Exempt Person) of, or the first public announcement of the
intention of any Person (other than an Exempt Person) to commence (which
intention to commence remains in effect for three Business Days after such
announcement) a tender or exchange offer, the consummation of which would result
in any Person becoming an Acquiring Person (including any such date that is
after the date of this Agreement and prior to the issuance of the Rights) (the
earlier of (i) and (ii) being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for shares of Common Stock registered in the
names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of shares of Common Stock. The Company shall give the Rights Agent
written notice of the Distribution Date as promptly as practicable thereafter.
As soon as practicable after the Distribution Date and receipt of written notice
of the Distribution Date from the Company, the Rights Agent will, at the expense
of the Company, send by first-class, insured, postage-prepaid mail, to each
record holder of shares of Common Stock as of the Close of Business on the
Distribution Date, or, with respect to shares of Common Stock so issued on or
after the Distribution Date (unless otherwise provided with respect thereto as
aforesaid), to the record
4
holder of such shares of Common Stock on the date of issuance, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B, evidencing one Right for each share of
Common Stock so held, subject to adjustments as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(i) hereof, at the time of distribution of the Right
Certificates, the Company may make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock as of the
Opening of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for shares of Common
Stock outstanding as of the Opening of Business on the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates for shares
of Common Stock registered in the names of the holders thereof (together with a
copy of the Summary of Rights attached thereto). Until the earlier of the
Distribution Date, the Redemption Date or the Final Expiration Date, the
surrender for transfer of any certificate for shares of Common Stock outstanding
on the Opening of Business on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the shares of Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or delivered from the
Company's treasury) after the Opening of Business on the Record Date but prior
to the earlier of the Distribution Date, the Redemption Date, the Exchange Date
or the Final Expiration Date; provided, however, that Rights may be issued with
respect to shares of Common Stock that become outstanding after the Distribution
Date and prior to the earlier of the Redemption Date, the Exchange Date and the
Final Expiration Date in accordance with Section 22 of this Agreement.
Certificates for shares of Common Stock issued after the Opening of Business on
the Record Date but prior to the earlier of the Distribution Date or the Final
Expiration Date (including, without limitation, reacquired shares of Common
Stock referred to in the last sentence of this paragraph (c)) 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 a
Rights Agreement between TII Industries, Inc. (the
"Company") and Xxxxxx Trust and Savings Bank, as
Rights Agent, dated as of May 15, 1998 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive offices
of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no
longer be evidenced by this certificate. The
Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the
date
5
of mailing, without charge promptly following
receipt of a written request therefor. Under
certain circumstances, Rights beneficially owned by
Acquiring Persons or Associates or Affiliates of
Acquiring Persons (as such terms are defined in the
Rights Agreement) and any subsequent holder of such
Rights may become null and void.
With respect to such certificates bearing the foregoing legend, until the
Distribution Date, the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates alone,
with or without the foregoing legend, and registered holders of shares of Common
Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates, with or without the foregoing legend,
shall also constitute the transfer of the Rights associated with the shares of
Common Stock represented by such certificates. In the event that the Company
purchases or acquires any shares of Common Stock after the Opening of Business
on the Record Date but prior to the Distribution 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 which are no longer outstanding.
Section 4. Form of Right Certificates. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form of Exhibit B and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or any national securities association on whose
interdealer quotation system the Rights may from time to time be authorized for
quotation, or to conform to usage. The Right Certificates shall be in a machine
printable format and in a form reasonably satisfactory to the Rights Agent.
Subject to the provisions of Section 22, the Right Certificates that are issued
in respect of shares of Common Stock that were issued and outstanding as of the
Opening of Business on the Record Date shall be dated as of the Record Date, and
all Right Certificates that are issued in respect of other shares of Common
Stock shall be dated as of the respective dates of issuance of such shares of
Common Stock, and in either case on their faces shall entitle the holders
thereof to purchase such number of one-thousandths of a Preferred Share as shall
be set forth therein at the price per one one-thousandth of a Preferred Share
set forth therein (the "Purchase Price"), but the number and type of securities
purchasable upon exercise of each Right and the Purchase Price shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3 or Section
22 that represents Rights which are null and void pursuant to Section 7(e) of
this Agreement, and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as
6
such terms are defined in the Rights Agreement).
Accordingly, this Right Certificate and the Rights
represented hereby are null and void.
The absence of the foregoing legend on any Right Certificate shall in
no way affect any of the other provisions of this Agreement, including, without
limitation, the provisions of Section 7(e). The Company shall instruct the
Rights Agent in writing of the Rights which should be so legended.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by its chairman, its
president or a vice president, either manually or by facsimile signature, and
have affixed thereto the Company's seal or a facsimile thereof that shall be
attested by the secretary, or an assistant secretary or treasurer, of the
Company, either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this 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 the office of the Rights Agent designated for such
purposes, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights as evidenced on the face
of each of the Right Certificates and the date and certificate number of each of
the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Section 4(b), Section 7(e), Section 11 and Section
14, at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share (or other securities or other assets,
as the case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate appropriately executed,
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section
7
11 and Section 14, countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment by the holder of a Right Certificate of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a))
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price with
respect to the total number of one one-thousandths of a Preferred Share (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earliest of (i) the Close of Business
on May 15, 2008 (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 (the "Redemption Date"), or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof (the
"Exchange Date").
(b) The Purchase Price for each one one-thousandth of a Preferred
Share pursuant to the exercise of a Right shall initially be $30, subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America, subject to paragraph
(c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares (or other securities or
other assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent for such shares
(or make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of shares of Preferred Shares to be purchased,
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the total
number of Preferred Shares issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depository agent depository receipts
representing such number of one one-thousandths of Preferred Shares as are to be
purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depository
agent) and the Company hereby directs the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional interests in shares in accordance
with Section 14, (iii) after receipt of such
8
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificates registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Right Certificate. The payment of the Purchase Price (as such amount may
be reduced pursuant to Section 11(a)(iii)) may be made in cash or by certified
or bank check or money order payable to the order of the Company. In the event
the Company is obligated to issue other securities (including shares of Common
Stock) of the Company or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities or property are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding anything to the contrary in this Agreement,
from and after the first occurrence of any Triggering Event, any Rights
beneficially owned by (i) any Acquiring Person (or any Associate or Affiliate of
an Acquiring Person), (ii) a transferee of an Acquiring Person (or any Associate
or Affiliate of an Acquiring Person) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
any Associate or Affiliate of an Acquiring Person) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) to holders of equity interests in such Acquiring Person (or of such
Associate or Affiliate) or to any Person with whom the Acquiring Person has any
agreement, arrangement or understanding regarding the transferred Rights, or (B)
a transfer that the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of its
failure to make any determination under this Section 7(e) or such Section 4(b)
with respect to any Acquiring Person or an Associate or Affiliate of an
Acquiring Person or their transferees.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
transfer or exercise unless such registered holder shall have (i) completed and
signed the certificate following the form of assignment or election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in 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.
9
The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Shars. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights pursuant to
the terms of this Agreement; and, after the occurrence of a Triggering Event,
shall to the extent reasonably practicable so reserve and keep available a
sufficient number of shares of Common Stock (and/or other securities) which may
be required to permit the exercise in full of the Rights pursuant to this
Agreement.
(b) So long as the Preferred Shares (or Common Shares and/or other
securities, as the case may be) issuable upon the exercise of Rights may be
listed on any national securities exchange or authorized for quotation on any
interdealer quotation system of any national securities association, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on such
exchange or quoted on such system upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
is practicable following the earliest date after the first occurrence of a
Triggering Event, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities pursuant to Section 11(a)(ii), (B) the Redemption Date or (C)
the Final Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the exercise thereof shall not
be permitted under applicable law.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock or 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), be
duly and validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that, subject to
Section 6 and Section 7(c), it will pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares of Common Stock
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax that may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depository receipts for the shares of Common Stock in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates or
depository receipts for the shares of
10
Common Stock upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name
any certificate for Preferred Shares (or Common Stock and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such Preferred Shares (or
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. 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 stockholder 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, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e), the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock that, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares (or Common Stock and/or other
securities, as the case may be) transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the securities of the
Company issuable upon the exercise thereof. If an event occurs that would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event any Person, at any time after the date of
this Agreement, is or becomes an Acquiring Person, then proper provision
shall be made so that each holder of a Right,
11
except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof at the then current Purchase Price, in
accordance with the terms of this Agreement, such number of shares of
Common Stock as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to
the first occurrence of the Section 11(a)(ii) Event and (y) dividing that
product by 50% of the current per share market price of the shares of
Common Stock (determined pursuant to Section 11(d)) on the date of the
occurrence of the Section 11(a)(ii) Event (such number of shares is
herein called the "Adjustment Shares"); provided, however, that the
Purchase Price and number of Adjustment Shares shall be further adjusted
as provided in this Agreement to reflect any event occurring after the
date of such first occurrence.
(iii) In the event that, after the date of the occurrence of
such a Section 11(a)(ii) Event, the number of shares of Common Stock
which is authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full
of the Rights, the Company shall: (A) determine the excess of (1) the
value of the Adjustment Shares in accordance with Section 11(a)(ii)
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess is herein called the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares upon exercise of the Rights, (1) cash, (2) a reduction
in the Purchase Price, (3) shares of Common Stock of the same or
different class or other equity securities of the Company (including,
without limitation, shares, or units of shares, of common stock which the
Board of Directors of the Company has deemed to have substantially the
same economic value as shares of Common Stock (such shares or units of
shares of Common Stock are referred to herein as "common stock
equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of
the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a
Section 11(a) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread.
(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 Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares, or shares
having the same rights as Preferred Shares ("equivalent preferred shares"), or
securities convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Shares or equivalent preferred shares, or having a
conversion price per share, if a security convertible into Preferred Shares or
equivalent preferred shares, less than the current per share market price of
Preferred Shares (as determined pursuant to Section 11(d)) on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be
12
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon the exercise of one Right. In case such subscription price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of Rights. Preferred Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price that would then be
in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of Preferred Shares (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 or
assets (other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
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 per share market
price of a Preferred Share (as determined pursuant to Section 11(d)) on such
record date less the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share and the denominator of which shall be such
current per share market price of a Preferred Share (as determined pursuant to
Section 11(d)) provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon the exercise of one Right.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would then be 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 per share
market price" of the shares of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such shares of Common Stock
for the thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "current per share market price" of
shares of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such shares of Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided, however,
that in the event that the current per share market price of the shares of
Common Stock is determined during a period following the announcement by the
issuer of such shares of Common Stock of (1) a dividend or distribution on such
shares of Common Stock payable in such shares of Common Stock or securities
convertible into such shares of Common Stock (other than the Rights), or (2) any
subdivision,
13
combination or reclassification of such shares of Common Stock, and prior to the
expiration of thirty (30) Trading Days, or ten (10) Trading Days, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be appropriately
adjusted to 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 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 the National Association
of Securities Dealers, Inc. Automated Quotation System ("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 shares of
Common Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the shares of Common Stock, the fair
value of the shares of Common Stock on such date as determined in good faith by
the Board of Directors of the Company shall be used. 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 exchange, a Business Day. If the
shares of Common Stock are not publicly held or not so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i).
If the Preferred Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be conclusively deemed to be
the current per share market price of the Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments that by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandth of a Preferred Share one
ten-thousandth of a any other security. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no
later than
14
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
the Preferred Shares, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Common 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 the Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (x) the number of one
one-thousandths of a Preferred Share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandth of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandth of a Preferred Share 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 ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 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 Rights on such record date Right Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
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
15
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 one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred Share that were expressed in the initial Right Certificates
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 number of
one one-thousandths of a Preferred Share, shares of Common Stock or other
securities issuable upon exercise of the Rights, the Company shall take any
corporate action that may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares, Common Stock or other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred
Shares, Common Stock or 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 (fractional or otherwise) upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that 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 Shares, (ii) issuance wholly for cash of any
Preferred Shares at less than the current market price, (iii) issuance wholly
for cash of Preferred Shares or other securities that by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into or engage in a share exchange with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), 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 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger, share
exchange or sale there are any rights, warrants, or other
16
instruments or securities outstanding or agreements in effect which would
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, share exchange or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates or Associates. The Company shall not
consummate any such consolidation, merger, sale or transfer unless prior there
to the Company and such other Person shall have executed and delivered to the
Rights Agent a Supplemental agreement evidencing compliance with this Section
11(h).
(o) The Company covenants and agrees that, after the Distribution
Date, it shall 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 otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) In the event that at any time, after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on its Shares of Common Stock payable in its Shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of its Shares
of Common Stock (by reclassification or otherwise than by payment of dividends
in its Shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in any such case (A) the number of one one-thousandths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-thousandths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Shares of Common Stock outstanding
immediately before such event and the denominator of which is the number Shares
of Common Stock outstanding immediately after such event, and (B) each Share of
Common Stock outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11 (p) shall be made
successively whenever such a dividend is declared or paid of such a subdivision,
combination or consolidation is effected.
(q) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the date of this Agreement
and prior to the Distribution Date consolidate with, or merge with or into, any
other Person for the primary purpose of a change of domicile of the Company,
and, in connection with such consolidation or merger, all of the outstanding
shares of Common Stock shall be changed into or exchanged for shares of Common
Stock of the surviving corporation of such consolidation or merger (the
"Surviving Corporation"), then proper provision shall be made so that Rights
shall be associated with each share of Common Stock of the Surviving
Corporation, except as provided in Section 7(e) hereof, such that the number of
Rights associated with each share of Common Stock of the Surviving Corporation
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Common
Stock of the Surviving Corporation which the shares of Common Stock were changed
into or exchanged for pursuant to the consolidation or merger. Following such a
consolidation or merger, this Agreement shall remain in effect and all
references to the Company shall be deemed to be references to the Surviving
Corporation.
17
Section 12. Certificate of Adjusted Purchase Price of Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
shares of Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of record 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 25. The Rights Agent shall be fully protected
in relying on such certificate and on any adjustment contained therein, and
shall not be obligated or responsible for calculating any adjustment, nor shall
it be deemed to have knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall engage in a share exchange with or
shall consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such share exchange,
consolidation or merger and, in connection with such share exchange,
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 cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case proper
provision shall be made so that
(i) each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number
of validly authorized and issued, fully paid, nonassessable 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
call, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the Purchase
Price in effect immediately prior to the first occurrence of a Section
11(a)(ii) Event by the number of one one-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to such first
occurrence of a Section 11(a)(ii) Event) and (2) dividing that product by
50% of the current per share market price of the shares of Common Stock
of such Principal Party (determined pursuant to Section 11(d)) on the
date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;
18
(iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party.
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of
Common Stock) 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;
and
(v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
If, in the case of a transaction of the kind described in clause (z) of the
first sentence of this Section 13(a), the Person or Persons to whom assets or
earning power are sold or otherwise transferred are individuals, then the
preceding sentences of this Section 13(a) shall be inapplicable, and the Company
shall require as a condition to such sale or transfer that such Person or
Persons pay to each holder of a Right Certificate, upon its surrender to the
Rights Agent and in exchange therefor (without requiring payment by such
holder), cash in the amount determined by multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right is then
exercisable.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities for or into which shares of Common Stock of the Company
are converted in such share exchange, merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
(iii) provided, however, that in any such case, (1) if the
shares of Common Stock of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the shares of Common Stock of which
are and have been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the shares of Common Stock of two or
more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the shares of Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have a sufficient number of authorized shares of
Common Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of
19
this Section 13 and further providing that, as soon as practicable after the
date of any such Section 13 Event, the Principal Party will
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdiction as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
(d) The provisions of this Section 13 shall similarly apply to
successive share exchanges, mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time after
the first occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates that evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issued fractions of
Preferred Shares (other than fractions which are one one-thousandth or integral
multiples of one one-thousandth of a
20
Preferred Share) upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which are one
one-thousandth or integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided that such agreement shall
provide that the holders of such depositary receipts shall have the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not one one-thousandth or integral
multiples of one one-thousandth of Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of this Section 14 (b),
the current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to Section 11 (d) (ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or event
specified in Section 11 giving rise to the right to receive shares of Common
Stock, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Company shall not be required to
issue fractions of such shares of Common Stock, capital stock equivalents or
other securities upon exercise of the Rights or to distribute certificates which
evidence fractions of such shares of Common Stock, Capital Stock equivalents or
other securities. In lieu of fractional shares or units of such shares of Common
Stock, capital 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 share or unit of such shares of Common Stock, capital stock
equivalents 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 capital stock equivalent is not traded, each such capital stock
equivalent shall have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional share upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the shares of 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 shares of Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the
21
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully completed and duly executed;
(c) subject to Section 6 and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to Section 7(e), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent such compensation as shall be agreed upon between the
Company and the Rights Agent for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its
22
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense (including
any and all special indirect or consequential losses or damages of any kind
(including but not limited to lost profits)), incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability arising therefrom and the costs and expenses of
enforcing the indemnification rights of the Rights Agent pursuant to this
Agreement. The provisions of this Section 18(a) shall survive the expiration of
the Rights and the termination of this Agreement, and the resignation and
removal of the Rights Agent.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for shares of Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed by the proper Person or Persons and, where necessary, to be
verified or acknowledged.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged 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 all or
substantially all the stock transfer or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name, and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or
23
obligations shall be read into this Agreement against the Rights Agent, by all
of which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound. Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel of its selection (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity or existence of any Acquiring
Person and the determination of "current per share 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 a certificate signed by any one of the chairman of the board, the president,
any vice president, the secretary, an assistant secretary or the treasurer of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 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 change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this 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, nor shall the Rights Agent
be responsible for the legality of the terms hereof in its capacity as an
administrative agent.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
24
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the chairman of the board, the president, any vice president, the
secretary or the treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become peculiarly interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents (other than employees), and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 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.
(k) In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action taken
or omitted by it in connection with its administration of this Agreement if such
acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of assignment
and the form of election to purchase attached hereto unless the Rights Agent
shall have actual knowledge that, as executed, such certification is untrue, or
(ii) the non-execution of such certification including, without limitation, any
refusal to honor any otherwise permissible assignment or election by reason of
such non-execution.
(l) 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.
(m) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as any Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
25
The Company agrees to give the Rights Agent prompt written notice of
any event or ownership known to the Company which would prohibit the exercise or
transfer of the Right Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice in writing mailed to the Company and to each transfer agent
of the shares of Common Stock by registered or certified mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the shares of Common Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the 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 corporation organized and doing business under the laws of the
United States or any state of the United States so long as such corporation is
authorized to do business as a banking institution, is in good standing, is
authorized under such laws to exercise corporate trust powers, and is subject to
supervision or examination by federal or state authority, and has at the time of
its appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice with the predecessor
Rights Agent and each transfer agent of the shares of Common Stock, and mail a
notice thereof in writing to the holders of record of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
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, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, 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
to the
26
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 adjustments
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of
the Company may, at its option, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 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"), (i) at any time prior to the
earlier of (x) the time that any Person becomes an Acquiring Person, or (y) the
Final Expiration Date, or (ii) within 10 days after any Person becomes an
Acquiring Person if (A) the Acquiring Person notifies the Board of Directors
that such person become an Acquiring Person inadverently and (B) during such 10
day period, and at the time of redemption, the Acquiring Person is no longer the
Beneficial Owner of 20% or more of the then outstanding shares of Common Stock.
(b) In the case of a redemption permitted under Section 23 (a),
immediately upon the date for redemption set forth (or determined in the manner
specified in) in a resolution of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. The Corporation 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 date for redemption set forth in a resolution of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 and other than in connection
with the purchase of Common Stock prior to the Distribution Date.
(c) 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 in accordance with this Agreement 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 Rights
and Right Certificates shall be null and void without any further action by the
Corporation.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for shares of Common Stock, each Right being exchangeable for one
share of Common Stock, appropriately adjusted to reflect any transaction
specified in Section 11(p) occurring after the date hereof (such number of
shares of Common Stock issuable in exchange for one Right
27
being referred to herein as the "Exchange Shares"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than any Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive the Exchange Shares. 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 that 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 7(e) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding, or authorized but unissued, to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable upon exchange
of a Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.
(d) 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 subsection (d), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second and third sentences
of Section 11(d) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of its shares of Common Stock or to
make any other distribution to the holders of its shares of Common Stock (other
than a regular quarterly cash dividend) or (ii) to offer to the holders of its
shares of Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
shares of Common Stock (other than a reclassification involving only the
28
subdivision of outstanding shares of Common Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(o) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions, each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
such proposed action that shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock, whichever shall be the earlier.
(b) In case a Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) or Section 13.
(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 on any such action.
SECTION 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
registered or certified mail and shall be deemed given upon receipt addressed
(until another address is filed in writing with the Rights Agent), or by
facsimile with confirmation of receipt (until another facsimile number is filed
in writing with the Rights Agent), as follows:
TII INDUSTRIES, INC.
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile:
Confirmation:
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt, addressed (until another address is
filed in writing with the Company), or by facsimile with confirmation of receipt
(until another facsimile number is filed in writing with the Company) as
follows:
29
XXXXXX TRUST & SAVINGS BANK 000 Xxxx Xxxxxx
Xxxxxx, 00xx Xxxxx Xxxxxxx, XX 00000
Attention:
Facsimile:
Confirmation:
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior to the Distribution
Date, the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Stock. From and after the
Distribution Date, 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 Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
however, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time period as the Rights are not redeemable,
or (B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such amendment or supplement does
not adversely affect the rights or obligations of the Rights Agent under Section
18 or Section 20 of this Agreement.
SECTION 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. Determinations and Actions by the Board of Directors. 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. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions
30
of this Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem, not redeem, exchange or not exchange the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties and (y) not
subject the Board to any liability to the holders of the Rights.
SECTION 30. Benefits of this Agreement. Nothing in this 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 shares of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the shares of Common Stock).
SECTION 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language of this Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[the remainder of this page is intentionally left blank]
31
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
TII INDUSTRIES, INC.
BY: /s/ XXXX X. XXXXXXX
--------------------------------------
NAME: XXXX X. XXXXXXX
TITLE: VICE PRESIDENT FINANCE AND
CHIEF FINANCIAL OFFICER
XXXXXX TRUST & SAVINGS BANK,
AS RIGHTS AGENT
BY: /s/ XXXXXX X. XXXXXXX
--------------------------------------
NAME: XXXXXX X. XXXXXXX
TITLE: ASSISTANT VICE PRESIDENT
32
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION OF
SERIES D JUNIOR PARTICIPATING PREFERRED STOCK OF
TII INDUSTRIES, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
TII Industries, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on May 7, 1998:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors hereby creates a
series of Preferred Stock of the Corporation, par value $1.00 per share (the
"Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Series D Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series D Junior Participating Preferred Stock" (the "Series D
Preferred Stock") and the number of shares constituting the Series D Preferred
Stock shall be 30,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no decrease shall reduce the
number of shares of Series D Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series D
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series D Preferred Stock with respect to dividends, the
holders of shares of Series D Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (the "Common Stock"),
of the Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in
cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series D
Preferred Stock, in an amount per share
A-1
(rounded to the nearest cent) equal to the greater of (a) $10 or (b)
subject to the provision for adjustment hereinafter set forth, 1000
times the aggregate per share amount of all cash dividends, and 1000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series D
Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series D Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series D Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $10 per share on the Series D Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series D Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series D 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 D 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 D Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
A-2
Section 3. Voting Rights. The holders of shares of Series D Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series D Preferred Stock shall entitle the holder
thereof to 1000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series D 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 any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series D Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series D Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series D 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 D Preferred Stock outstanding shall have been paid in full, the
Corporation shall not: (i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
D Preferred Stock;
(ii) declare or pay dividends, 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 D Preferred Stock, except dividends paid ratably on the Series D
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
D Preferred Stock, provided that the Corporation may at any time
redeem,
A-3
purchase or otherwise acquire shares of any such junior 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 D Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series D Preferred Stock, or any shares of stock ranking
on a parity with the Series D 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 Dnd 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 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series D 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
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series D
Preferred Stock unless, prior thereto, the holders of shares of Series D
Preferred Stock shall have received $1000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series D
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series D Preferred Stock, except distributions made ratably on the Series D
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series D Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) 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
A-4
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In 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 each share of
Series D Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1000 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 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series D Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series D Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series D Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series D Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series D Preferred Stock, voting
together as a single class.
A-5
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its Chief Financial Officer and attested by its
Assistant Secretary this 14th day of May, 1998.
TII INDUSTRIES, INC.
By:
---------------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
Attest:
By:
------------------------------
Xxxxxxxx Xxxx
Assistant Secretary
A-6
Exhibit B
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MAY ___, 2008 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
TII INDUSTRIES, INC.
This certifies that ___________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May __, 1998 (the "Rights Agreement"), between TII
Industries, Inc., a Delaware corporation (the "Company"), and Xxxxxx Trust (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 May __, 2008 at the principal office of the Rights Agent, or
at the office of its successor as Rights Agent, one one-thousandth of a fully
paid non-assessable share of Series D Junior Participating Preferred Stock of
the Company, par value $1.00 per share (the "Preferred Shares"), at a purchase
price of $30 per one one-thousandth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of May __, 1998 based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights
B-1
Agreement are on file at the principal executive offices of the Company and the
offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged, in whole or in part, for
Preferred Shares or shares of the Company's Common Stock, par value $.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in, lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of May __, 1998.
TII INDUSTIRES, INC.
By:
----------------------------
Name:
Title:
Countersigned:
Xxxxxx Trust and Savings Bank, Rights Agent
By:
--------------------------------
Name:
Title:
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates)
FOR VALUE RECEIVED
-------------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ,
-------------------------------
-----------------------------------
Signature
--------------------------------------------------------------------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate (cross out one of the following) [is] [is
not] being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned (cross out one of the following) [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 any such Acquiring Person.
Dated: ,
--------------------------
----------------------------------------
Signature
- 1 -
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
--------------------------------------------------------------------------------
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To: TII Industries, Inc.
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the number of shares of one
one-thousandths of a share of Preferred Stock or, if applicable, Common Stock
(or fractions thereof), issuable upon the exercise of such Rights (or such other
securities of the Company or of any other person which may be issuable upon
exercise of the Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
Dated: ,
--------------------------
----------------------------------
Signature
--------------------------------------------------------------------------------
1
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) Rights evidenced by this Rights Certificate (cross out one of the
following) [are] [are not] being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned (cross out one of the following) [did ] [did not] acquire the
Rights evidenced by this Rights Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person.
Dated: ,
------------------------
-----------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
The signatures in the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
--------------------------------------------------------------------------------
WARNING
In the event the Certificate set forth above in the Assignment and Election to
Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate of such Acquiring Person (as defined in the Rights
Agreement), and such Assignment or Election to Purchase will not be honored.
- 1 -
Exhibit C
TII INDUSTRIES, INC.
(the "Company")
Rights Agreement, dated as of May 15, 1998
Summary of Rights
Issuance The Rights are being distributed as a dividend
on each share of Common Stock of the Company
outstanding at the opening of business on May
21, 1998.
Purchase Price Each Right entitles the registered holder
to purchase from the Company one one-thousandth
of a share of Series D Junior Participating
Preferred Stock, par value $1.00 per share, of
the Company (the "Preferred Stock") at a price
of $30 per Right (the "Purchase Price"),
subject to adjustment.
Exercisability The Rights detach and become exercisable upon
the earlier of:
(1) ten days after the first public
announcement that a person or group of
affiliated or associated persons (an
"Acquiring Person") has acquired
beneficial ownership of 20% or more of the
Company's outstanding Common Stock (the
"Stock Acquisition Date"), or
(2) ten business days (or a later date as
is determined by the Board in accordance
with the Rights Agreement) after the
commencement of, or an announcement of an
intention to commence a tender offer or
exchange offer that would result in a
person or group beneficially owning 20% or
more of the Company's outstanding Common
Stock.
Transferability The Rights are not detachable and not
separately transferable from the Company's
Common Stock until they become exercisable.
"Flip-In" Triggering Events If any person becomes an Acquiring
Person by acquiring beneficial ownership of 20%
or more of the Company's
C-1
Common Stock, each outstanding Right will "flip
in" and become a right to buy at the Purchase
Price that number of shares of Common Stock of
the Company that will have a market value of
two times the Purchase Price. Notwithstanding
the foregoing, all Rights that are beneficially
owned by any Acquiring Person (and its
affiliates and associates) will be null and
void upon the occurrence of a Flip-In
Triggering Event.
"Flip-Over" Triggering Events If following the time a person becomes an
Acquiring Person (1) the Company is acquired in
a merger or other business combination
transaction and the Company does not survive or
the Company merges, consolidates or engages in
a share exchange with any other person and does
survive but all or part of its stock is
changed, or (2) 50% or more of the Company's
assets or earning power is sold or transferred
to any person, then each outstanding Right will
"flip over" and become a right to buy at the
Purchase Price that number of shares of Common
Stock of the entity acquiring the Company or
its assets equal to a market value of two times
the Purchase Price.
Redemption The Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.01 per
Right at any time prior to the time a person
acquires beneficial ownership of 20% or more of
the Common Stock. The Board may redeem the
Rights within 10 days following the time a
person has acquired 20% or more of the Common
Stock only if (i) such person notifies the
Board that the person acquired such stock
inadvertently and (ii) such person disposes of
enough Common Stock such that at the time of
redemption such person no longer owns more than
20% of the outstanding Common Stock.
Exchange Option After a person becomes an Acquiring Person (but
before any person or group owns 50% or more of
the outstanding Common Stock), the Company may
permit the Rights (other than those owned by an
Acquiring Person) to be exchanged, in whole or
in part, without payment of the Purchase Price,
for one share of Common Stock per Right. The
aggregate dilutive effect on an Acquiring
Person upon exchange of the Rights is somewhat
less than the dilutive effect of a normal
exercise of the Rights.
C-2
Amendment Until the Rights become exercisable the terms
of the Rights Agreement may be amended or
supplemented without the approval of any
holders of the Rights. Following the
Distribution Date, the Company can amend the
Rights Agreement only to cure an ambiguity, to
correct or supplement a provision of the Rights
Agreement which may be defective or
inconsistent with other provisions of the
Rights Agreement, to shorten or lengthen the
time periods set forth in the Rights Agreement,
or to change or supplement the provisions of
the Rights Agreement in a manner not adverse to
the holders of the Rights (other than an
Acquiring Person). During any time that the
Rights are not subject to redemption, the
Company may not amend the Rights Agreement to
lengthen any time period relating to when the
Rights may be redeemed or lengthen any other
time period unless such lengthening is for the
purpose of protecting the holders of the
Rights.
Voting The Rights have no voting power.
Dividends The Rights have no rights to dividends.
Term Ten years
Miscellaneous The Rights Agreement provides that the Company
may not enter into any transactions, agreements
or arrangements intended to counteract the
protective provisions of the Rights.
* * *
Dated: May 15, 1998
