1
Exhibit 3.3
--------------------------------------------------------------------------------
INTERSTATE HOTELS MANAGEMENT, INC.
and
[TRANSFER AGENT],
as Rights Agent
Form of
Shareholder Rights Agreement
Dated as of April ____, 1999
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Section Page
------- ----
1. Certain Definitions...........................................................................................1
2. Appointment of Rights Agent...................................................................................7
3. Issue of Right Certificates...................................................................................7
4. Form of Right Certificates....................................................................................9
5. Countersignature and Registration............................................................................10
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates........................................................................11
7. Exercise of Rights; Exercise Price; Expiration Date of Rights................................................12
8. Cancellation and Destruction of Right Certificates...........................................................14
9. Reservation and Availability of Preferred Stock..............................................................15
10. Preferred Stock Record Date.................................................................................16
11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights.................................16
12. Certificate of Adjusted Exercise Price or Number of Shares..................................................25
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power........................................26
14. Fractional Rights and Fractional Shares.....................................................................29
15. Rights of Action............................................................................................29
16. Agreement of Right Holders..................................................................................30
17. Right Certificate Holder Not Deemed a Shareholder...........................................................31
18. Concerning the Rights Agent.................................................................................31
19. Merger or Consolidation or Change of Name of Rights Agent...................................................31
i
3
20. Duties of Rights Agent......................................................................................32
21. Change of Rights Agent......................................................................................34
22. Issuance of New Right Certificates..........................................................................35
23. Redemption..................................................................................................36
24. Exchange....................................................................................................37
25. Notice of Certain Events....................................................................................39
26. Notices.....................................................................................................40
27. Supplements and Amendments..................................................................................40
28. Successors..................................................................................................41
29. Determinations and Actions by the Board of Directors........................................................41
30. Benefits of this Agreement..................................................................................42
31. Severability................................................................................................42
32. Governing Law...............................................................................................42
33. Counterparts................................................................................................42
34. Descriptive Headings........................................................................................42
Exhibit A -- Articles Supplementary to the Articles of
Incorporation classifying and designating
the Series A Junior Participating
Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
ii
4
SHAREHOLDER RIGHTS AGREEMENT
Agreement, dated as of April ____, 1999 between Interstate Hotels
Management, Inc., a Maryland corporation (the "Company"), and [TRANSFER AGENT],
a _________________ (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, effective as of April ___, 1999 the Board of Directors of the
Company authorized and declared a dividend distribution of one Right (as such
term is hereinafter defined) for each outstanding share of Common Stock, par
value $0.01 per share, of the Company (the "Common Stock") outstanding as of the
close of business on April __, 1999 (the "Record Date"), and contemplates the
issuance of one Right for each share of Common Stock of the Company issued
(whether originally issued or sold from the Company's treasury, except in the
case of treasury shares having associated Rights) between the Record Date and
the earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase
[one one-thousandth] of a share of Series A Junior Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth on Exhibit A hereto, upon the terms and subject to the conditions
hereinafter set forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
5
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 10% or more of the shares of Common Stock of the Company then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company or (iv)
any Person holding shares of Common Stock of the Company organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan or compensation arrangement (the
Persons described in clauses (i) through (iv) above are referred to herein as
"Exempt Persons").
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition by the Company of Common Stock of the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 10% or more
of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 10% or more of
the shares of Common Stock of the Company 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 (other than pursuant to a
stock split, stock dividend or similar transaction) of Common Stock of the
Company and immediately thereafter be the Beneficial Owner of 10% or more of the
shares of Common Stock of the Company then outstanding, then such Person shall
be deemed to be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if (i) the Board of Directors of the Company determines that
a Person who would otherwise have been an "Acquiring Person," as defined
pursuant to the foregoing provisions of this Section 1(a), on the date of this
Agreement became such inadvertently, and, if the Board of Directors of the
Company so requests, such Person shall have taken or agreed to take such action
as the Board of Directors shall have deemed appropriate (any such Person being
referred to herein as an "Inadvertent Grandfathered Person"), or (ii) the Board
of Directors of the Company determines that a Person (including an Inadvertent
Grandfathered Person) who would otherwise be an "Acquiring Person," has become
such inadvertently, and such Person divests as promptly as practicable (or
within such period of time as the Board of Directors of the Company determines
is reasonable) a sufficient number of shares of Common Stock of the Company so
that such Person would no longer be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this Section 1(a). Notwithstanding the foregoing,
(A) an Inadvertent Grandfathered Person shall become an Acquiring Person if
after the date of this Agreement such Inadvertent Grandfathered Person becomes
the Beneficial Owner of more than the percentage of the outstanding shares of
Common Stock of the Company that such Inadvertent Grandfathered Person
Beneficially Owned as of the date of this Agreement plus an additional 1% (the
"Inadvertent Grandfathered Percentage"), (B) in the event any Inadvertent
2
6
Grandfathered Person shall sell, transfer, or otherwise dispose of any
outstanding shares of Common Stock of the Company after the date of this
Agreement, the Inadvertent Grandfathered Percentage applicable to such
Inadvertent Grandfathered Person shall, subsequent to such sale, transfer or
disposition, mean, with respect to such Inadvertent Grandfathered Person, the
lesser of (x) the Inadvertent Grandfathered Percentage as in effect immediately
prior to such sale, transfer or disposition or (y) the percentage of outstanding
shares of Common Stock of the Company that such Inadvertent Grandfathered Person
Beneficially Owns immediately following such sale, transfer or disposition plus
an additional 1%, and (C) any Inadvertent Grandfathered Person who after the
date of this Agreement becomes the Beneficial Owner of less than 10% of the
shares of Common Stock of the Company then outstanding shall cease to be an
Inadvertent Grandfathered Person. Any references in this Agreement to a 10%
threshold shall mean, solely with respect to any Inadvertent Grandfathered
Person, the Inadvertent Grandfathered Percentage applicable to such Inadvertent
Grandfathered Person.
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations (the "Rules") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement; provided,
however, that no Person who is a director or officer of the Company shall be
deemed an Affiliate or an Associate of any other director or officer of the
Company solely as a result of his or her position as director or officer of the
Company.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially
owns (as determined pursuant to Rule 13d-3 of the Rules under
the Exchange Act, as in effect on the date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has:
(A) the right to acquire (whether such right
is exercisable immediately or only after the passage
of time or upon the satisfaction of any conditions or
both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) (other than
customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities) or upon the exercise
of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the "Beneficial Owner"
3
7
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 these 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, which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Sections
3(a), 11(i) or 22 hereof; or
(B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause
(B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance
with, the Rules of the Exchange Act and (2) is not
also then reportable by such person on Schedule 13D
under the Exchange Act (or any comparable or
successor report); or
(C) the right to dispose of pursuant to any
agreement, arrangement or understanding (whether or
not in writing) (other than customary arrangements
with and between underwriters and selling group
members with respect to a bona fide public offering
of securities); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in clause
(B) of Section 1(d)(ii) hereof) or disposing of any securities
of the Company;
provided, however, that (1) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition, and (2) no Person who is a director or an officer of the Company
shall be deemed, as a result of his or her position as director or officer of
the Company, the Beneficial Owner of any securities of the Company that are
beneficially owned by any other director or officer of the Company.
4
8
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the City of New York, New York
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York, New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York, New York time, on
the next succeeding Business Day.
(g) "Common Stock" when used in reference to the Company shall
mean the common stock, par value $0.01 per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean (i) the capital
stock or other equity interest of such Person with the greatest voting power,
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or (iii) if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person and which have issued any such outstanding capital stock,
equity securities or equity interest. "Common Stock" when used with reference to
any Person not organized in corporate form shall mean units of beneficial
interest which (x) shall represent the right to participate generally in the
profits and losses of such Person (including without limitation any flow-through
tax benefits resulting from an ownership interest in such Person) and (y) shall
be entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove or otherwise replace
the general partner or partners.
(h) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Depositary Agent" shall have the meaning set forth in
Section 7(c) hereof.
(j) "Distribution Date" shall have the meaning defined in
Section 3(a) hereof.
(k) "Exchange Act" shall have the meaning set forth in the
definition of "Affiliate" and "Associate".
(l) "Exempt Person" shall have the meaning set forth in the
definition of "Acquiring Person".
(m) "Exercise Price" shall have the meaning defined in Section
4(a) hereof.
5
9
(n) "Expiration Date" and "Final Expiration Date" shall have
the meanings set forth in Section 7(a) hereof.
(o) "Fair Market Value" of any securities or other property
shall be as determined in accordance with Section 11(d) hereof.
(p) "Inadvertent Grandfathered Percentage" shall have the
meaning set forth in the definition of "Acquiring Person".
(q) "Inadvertent Grandfathered Person" shall have the meaning
set forth in the definition of "Acquiring Person".
(r) "Person" shall mean (a) an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust, a
government or political subdivision, any unincorporated organization, or any
other association or entity, and (b) a "group" as that term is used for purposes
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(s) "Preferred Stock" shall mean shares of Series [__] Junior
Participating Cumulative Preferred Stock, par value [$0.01] per share, of the
Company having the rights and preferences set forth in the form of Articles
Supplementary attached hereto as Exhibit A.
(t) "Preferred Stock Equivalents" shall have the meaning set
forth in Section 11(b) hereof.
(u) "Principal Party" shall have the meaning defined in
Section 13(b) hereof.
(v) "Redemption Price" shall have the meaning defined in
Section 23 hereof.
(w) "Registered Common Stock" shall have the meaning set forth
in Section 13(b) hereof.
(x) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Rules" shall have the meaning set forth in the definition
of "Affiliate" and "Associate".
(z) "Section 11(a)(ii) Event" shall have the meaning defined
in Section 11(a)(ii) hereof.
6
10
(aa) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(bb) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(cc) "Section 24(a)(i) Exchange Ratio" shall have the meaning
set forth in Section 24(a)(i) hereof.
(dd) "Section 24(a)(ii) Exchange Ratio" shall have the meaning
set forth in Section 24(a)(ii) hereof.
(ee) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ff) "Stock Acquisition Date" shall mean the date of the first
public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company, acting pursuant to
a resolution adopted by the Board of Directors of the Company, or an Acquiring
Person that an Acquiring Person has become such.
(gg) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions of such corporation or other entity are at the time directly or
indirectly beneficially owned or otherwise controlled by such Person either
alone or together with one or more Affiliates of such Person.
(hh) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ii) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date (as
hereinafter defined in Section 3(a)) also be the holders of the Common Stock of
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. 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.
The
7
11
Company shall give notice to the Rights Agent of the appointment of one or more
Co-Rights Agents and the respective duties of the Rights Agent and any such
Co-Rights Agents.
Section 3. Issue of Right Certificates.
(a) From the date hereof until the earlier of (i) the Close of
Business on the tenth calendar day after the Stock Acquisition Date or (ii) the
Close of Business on the tenth Business Day (or such later calendar day, if any,
as the Board of Directors of the Company may determine in its sole discretion)
after the date a tender or exchange offer by any Person, other than an Exempt
Person, is first published or sent or given within the meaning of Rule 14d-4(a)
of the Exchange Act, or any successor rule, if, upon consummation thereof, such
Person would be the Beneficial Owner of 10% or more of the shares of Common
Stock of the Company then outstanding (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights) (the
earliest of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for the Common Stock of the Company registered in the names
of the holders of the Common Stock of the Company (which certificates for Common
Stock of the Company shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company. As soon as practicable after the Distribution Date, the Rights Agent
will, at the Company's expense send, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock of the Company as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form of
Exhibit B hereto (the "Right Certificates"), evidencing one Right for each share
of Common Stock of the Company so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock of the Company has been made pursuant to Section 11(o) hereof, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) at the time of distribution of the Right
Certificates, 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 Close of Business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) With respect to certificates for the Common Stock of the
Company issued prior to the Close of Business on the Record Date, the Rights
will be evidenced by such certificates for the Common Stock of the Company on or
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the registered holders of the Common Stock of
the Company also shall be the registered holders of the associated Rights. Until
the Distribution Date (or the earlier redemption, expiration or termination of
the Rights), the transfer of any of the certificates for the Common Stock of the
Company outstanding prior to the date of this Agreement shall also constitute
the transfer of the Rights associated with the Common Stock of the Company
represented by such certificate.
8
12
(c) Certificates for the Common Stock of the Company issued
after the Record Date, but prior to the earlier of the Distribution Date or the
redemption, expiration or termination of the Rights, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form set
forth below:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Rights
Agreement between Interstate Hotels Management, Inc. and
[TRANSFER AGENT], as Rights Agent, dated as of April ___,
1999, as amended, restated, renewed or extended from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of Interstate Hotels Management,
Inc. and the stock transfer administration office of the
Rights Agent. 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. Interstate Hotels Management, Inc. may redeem the
Rights at a redemption price of $0.01 per Right, subject to
adjustment, under the terms of the Rights Agreement.
Interstate Hotels Management, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect
on the date of mailing, without charge promptly after receipt
of a written request therefor. Under certain circumstances,
Rights issued to or held by Acquiring Persons or any
Affiliates or Associates thereof (as defined in the Rights
Agreement), and any subsequent holder of such Rights, may
become null and void. The Rights shall not be exercisable, and
shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification, if any, to the issuance to
such holder, or the exercise by such holder, of the Rights in
such jurisdiction shall not have been obtained or be
obtainable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock of the Company represented by such certificates
shall be evidenced by such certificates alone until the Distribution Date (or
the earlier redemption, expiration or termination of the Rights), and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock of the Company represented by such
certificates. In the event that the Company purchases or acquires any shares of
Common Stock of the Company after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Stock of the Company 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 of the Company
which are no longer outstanding. The failure to print the
9
13
foregoing legend on any such certificate representing Common Stock of the
Company or any defect therein shall not affect in any manner whatsoever the
application or interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the reverse
thereof) shall each be substantially in the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. 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 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, shall
show the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (the
"Exercise Price"), but the number of such shares and the Exercise Price shall be
subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) 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 to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights, the shares of Common Stock of the Company
associated with such Rights or the Company or (B) a transfer which 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 Section
7(e) hereof, and any Right Certificate issued pursuant to Section 6, Section 11
or Section 22 upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain 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 such terms are defined in the Rights Agreement). This
Right
10
14
Certificate and the Rights represented hereby may become null
and void under certain circumstances as specified in Section
7(e) of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or any Associate or
Affiliate thereof. The Company shall instruct the Rights Agent in writing of the
Rights which should be so legended. The failure to print the foregoing legend on
any such Right Certificate or any defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of Section 7(e)
hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors, or its President or any Vice
President and by its Treasurer or any Assistant Treasurer, or by its Secretary
or any Assistant Secretary, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested to by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned, and such countersignature upon
any Right Certificate shall be conclusive evidence, and the only evidence, that
such Right Certificate has been duly countersigned as required hereunder. 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 an authorized
signatory of 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 Certificates may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated as the appropriate
place for surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
11
15
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Certificates, entitling
the registered holder to purchase a like number of one one-thousandths of a
share of Preferred Stock (or following a Triggering Event, preferred stock,
cash, property, debt securities, Common Stock of the Company or any combination
thereof) as the Right Certificate or Certificates surrendered then entitled such
holder to purchase and at the same Exercise Price. 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 Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate duly executed, at the
office or offices 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) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Certificates, as the case may be, as so
requested. The Company may require payment by the registered 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 satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate, if
mutilated, the Company will execute 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; Exercise Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Exercise
Price for the total number of one one-thousandths of a share of Preferred Stock
(or other securities, cash or other assets, as
12
16
the case may be) as to which such surrendered Rights are then exercised, at or
prior to the earlier of (i) the Close of Business on the tenth anniversary of
the date of this Agreement (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof (the earlier of
(i), (ii) or (iii) being herein referred to as the "Expiration Date"). Except as
set forth in Section 7(e) hereof and notwithstanding any other provision of this
Agreement, any Person who prior to the Distribution Date becomes a record holder
of shares of Common Stock of the Company may exercise all of the rights of a
registered holder of a Right Certificate with respect to the Rights associated
with such shares of Common Stock of the Company in accordance with the
provisions of this Agreement, as of the date such Person becomes a record holder
of shares of Common Stock of the Company.
(b) The Exercise Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$______, shall be subject to adjustment from time to time as provided in Section
11 and Section 13 hereof and shall be payable in lawful money of the United
States of America in accordance with Section 7(c) below.
(c) As promptly as practicable following the Distribution
Date, the Company shall deposit with a corporation, trust, bank or similar
institution in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by a federal or state authority (such institution is hereinafter
referred to as the "Depositary Agent"), certificates representing the shares of
Preferred Stock that may be acquired upon exercise of the Rights and the Company
shall cause such Depositary Agent to enter into an agreement pursuant to which
the Depositary Agent shall issue receipts representing interests in the shares
of Preferred Stock so deposited. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by payment of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) requisition
from the Depositary Agent (or make available, if the Rights Agent is the
Depositary Agent) depository receipts or certificates for the number of one
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes the Depositary Agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay
13
17
cash or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash or
other property are available for distribution by the Rights Agent, if and when
appropriate. The payment of the Exercise Price may be made in cash or by
certified or bank check payable to the order of the Company, or by wire transfer
of immediately available funds to the account of the Company (provided that
notice of such wire transfer shall be given by the holder of the related Right
to the Rights Agent).
(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 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event or
Section 13 Event, any Rights beneficially owned by (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of 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 to holders
of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, the shares of Common Stock of the Company
associated with such Rights or the Company, or (B) a transfer which 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) hereof are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any Affiliates or
Associates of an Acquiring Person or any transferee of any of them hereunder.
(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 of Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the
14
18
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 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 Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock issuable upon exercise of all outstanding Rights in
excess of the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance to be listed, upon official notice of issuance,
upon the principal national securities exchange, if any, upon which the Common
Stock of the Company is listed or, if the principal market for the Common Stock
of the Company is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as 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 that at all times meets 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 or (B) the Expiration Date. The Company
will also take such action as may be
15
19
appropriate under, and which will ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date determined in accordance with the
provisions of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect, in each case with prompt written notice to the Rights Agent.
Notwithstanding any such provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates or depositary receipts for such shares (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for securities in a name other than that of the
registered holder upon the exercise of any Rights until 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 Stock Record Date. Each Person in whose name any
certificate for Preferred Stock (including any fraction of a share of Preferred
Stock) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock 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
Exercise Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
transfer books of the Company are open; and further provided, however, that if
delivery of shares of Preferred Stock is delayed pursuant to Section 9(c), such
Person shall be deemed to have become the record holder of such shares of
Preferred Stock only when
16
20
such shares first become deliverable. Prior to the exercise of the Right
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue
any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Exercise Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Stock transfer
books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to
be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of a Right. If an event occurs
which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) Subject to the provisions of Section 24 hereof,
in the event any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person (a "Section
11(a)(ii) Event"), then promptly following any such
occurrence, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e) hereof, shall
thereafter have a right to receive, upon exercise thereof at
the then current Exercise Price in accordance with the terms
of this Agreement, such number of shares of Preferred Stock of
17
21
the Company as shall equal the result obtained by (x)
multiplying the then current Exercise Price by the then number
of one one-thousandths of a share of Preferred Stock for which
a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and dividing that product by (y)
50% of the Fair Market Value per one one-thousandth of a share
of the Preferred Stock (determined pursuant to Section 11(d))
on the date of the occurrence of a Section 11(a)(ii) Event
(such number of shares being referred to as the "Adjustment
Shares").
(iii) In lieu of issuing any shares of Preferred
Stock in accordance with Section 11(a)(ii) hereof, the
Company, acting by resolution of the Board of Directors of the
Company, may, and in the event that the number of shares of
Preferred Stock which are authorized by the Company's Articles
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 in
accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Company, acting by resolution of the Board
of Directors of the Company, shall: (A) determine the excess
of (X) the Fair Market Value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (Y)
the Exercise Price attributable to each Right (such excess
being referred to as the "Spread") and (B) with respect to all
or a portion of each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Exercise Price, (1)
cash, (2) a reduction in the Exercise Price, (3) Preferred
Stock Equivalents which the Board of Directors of the Company
has deemed to have the same value as shares of Common Stock of
the Company, (4) debt securities of the Company, (5) other
assets of the Company or (6) any combination of the foregoing
which, when added to any shares of Preferred Stock issued upon
such exercise, has 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, that if
the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within 30 days following
the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Exercise Price, shares of
Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that
sufficient additional shares of
18
22
Preferred Stock could be authorized for issuance upon exercise
in full of the Rights, the 30-day period set forth above may
be extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended,
being referred to herein as the "Substitution Period"). To the
extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution Period
in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended
and a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the
value of the Preferred Stock shall be the Fair Market Value
(as determined pursuant to Section 11(d) hereof) per share of
the Preferred Stock on the Section 11(a)(ii) Trigger Date and
the value of any Preferred Stock Equivalent shall be deemed to
have the same value as the Preferred Stock on such date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same or more
favorable rights, privileges and preferences as the shares of Preferred Stock
("Preferred Stock Equivalents")) or securities convertible into Preferred Stock
or Preferred Stock Equivalents at a price per share of Preferred Stock or per
share of Preferred Stock Equivalents (or having a conversion price per share, if
a security convertible into Preferred Stock or Preferred Stock Equivalents) less
than the Fair Market Value (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock on such record date, the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or Preferred
Stock Equivalents to be offered (and the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Fair Market
Value and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of additional shares of
Preferred Stock and Preferred Stock Equivalents 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 a Right be less than the aggregate
par value of the shares of capital stock of the Company issuable upon
19
23
exercise of a 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 the Fair Market Value thereof determined in
accordance with Section 11(d) hereof. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustments 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 Exercise Price shall be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(b)), the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one one-thousandth of a share of Preferred Stock on such record date, less
the Fair Market Value (as determined pursuant to Section 11(d) hereof) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one one-thousandth of a share of Preferred Stock and the denominator of which
shall be the Fair Market Value (as determined pursuant to Section 11(d) hereof)
per one one-thousandth of a share of Preferred Stock; provided, however, that in
no event shall the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of stock of the Company issuable upon
exercise of a 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 Exercise Price shall again be adjusted to be the Exercise Price which would
be in effect if such record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value"
of any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11(d).
(i) In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to
be the average of the daily closing prices per share of such
stock or per unit of such other security for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the
event that the Fair Market Value per share of any share of
stock is determined during a period following the announcement
by the issuer of such stock of (x) a dividend or distribution
20
24
on such stock payable in shares of such stock or securities
convertible into shares of such stock or (y) any subdivision,
combination or reclassification of such stock, and prior to
the expiration of the 30 Trading Day period 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 Fair Market Value shall be
properly adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if
the securities 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 such security is listed or admitted to
trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if
not so quoted, the average of the last quoted 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 no bids for such security are 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
such security selected by the Board of Directors of the
Company. If on any such date no market maker is making a
market in such security, the Fair Market Value of such
security on such date shall be determined reasonably and with
utmost good faith to the holders of the Rights by the Board of
Directors of the Company, provided, however, that if at the
time of such determination there is an Acquiring Person, the
Fair Market Value of such security on such date shall be
determined by a nationally recognized investment banking firm
selected by the Board of Directors of the Company, which
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. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(ii) If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair
value per share of stock or per other unit of such security,
determined reasonably and with utmost good faith to the
holders of the Rights by the Board of Directors of the
Company, provided, however, that if at the time of such
determination there is an Acquiring Person, the Fair Market
Value of such security on such date shall be determined by a
nationally recognized investment banking firm selected by the
Board of Directors of the
21
25
Company, which 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; provided, however, that
for the purposes of making any adjustment provided for by
Section 11(a)(ii) hereof, the Fair Market Value of a share of
Preferred Stock shall not be less than the product of the then
Fair Market Value of a share of Common Stock multiplied by the
higher of the then Dividend Multiple or Vote Multiple (as both
of such terms are defined in the Articles Supplementary
attached as Exhibit A hereto) applicable to the Preferred
Stock and shall not exceed 105% of the product of the then
Fair Market Value of a share of Common Stock multiplied by the
higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock.
(iii) In the case of property other than securities,
the Fair Market Value thereof shall be determined reasonably
and with utmost good faith to the holders of Rights by the
Board of Directors of the Company, provided, however, that if
at the time of such determination there is an Acquiring
Person, the Fair Market Value of such property on such date
shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors of the
Company, which determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the
Rights Agent and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest hundred-thousandth of a share of Common Stock
of the Company or ten-millionth of a share of Preferred Stock, as the case may
be, or to such other figure as the Board of Directors of the Company may deem
appropriate. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Section 11(a), (b), (c), (d), (e),
(g) through (k) and (m), inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
22
26
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or amount of cash or combination
thereof) 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 Exercise Price as a
result of the calculations made in Section 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 Exercise Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-millionth) as the Board of Directors of the Company determines is
appropriate to preserve the economic value of the Rights, including, by way of
example, that number obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock for which a Right may be
exercisable immediately prior to this adjustment by (y) the Exercise Price in
effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by dividing the Exercise Price in
effect immediately prior to adjustment of the Exercise Price by the Exercise
Price in effect immediately after adjustment of the Exercise 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 Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the
23
27
Company, the adjusted Exercise 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 Exercise
Price or the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder without prejudice to any adjustment or change.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then stated value, if any, of the number
of one one-thousandths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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 number of one one-thousandths of a share of Preferred Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly for cash of
any shares of Preferred Stock at less than the Fair Market Value, issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with (other than a Subsidiary of the Company in a
transaction which complies with the proviso at the end of this sentence), (ii)
merge with or into, or (iii) sell or transfer (or permit any Subsidiary to sell
or
24
28
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 other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with the proviso at the end of this
sentence) if (x) at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments outstanding or
agreements or arrangements 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 or
sale the shareholders of a Person who constitutes, or would constitute, the
"Principal Party" for the purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates; provided, however, that this Section 11(n) shall not affect the
ability of any Subsidiary of the Company to consolidate with, merge with or
into, or sell or transfer assets or earning power to, any other Subsidiary of
the Company. The Company further covenants and agrees that after the
Distribution Date it will not, except as permitted by Section 23 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 substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
(o) Notwithstanding anything in this Agreement to the
contrary, in the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare or pay any dividend on
the outstanding Common Stock of the Company payable in shares of Common Stock of
the Company or (ii) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the Company)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (A) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock of the Company
outstanding immediately prior to such event and the denominator of which is the
number of shares of Common Stock of the Company outstanding immediately after
such event, and (B) each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11(o) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights of holders of Right Certificates under
this Rights Agreement, including rights to purchase securities of the Principal
Party following a Section 13 Event which has occurred or
25
29
may thereafter occur, as set forth in Section 13 hereof. Upon exercise of a
Right Certificate under Section 11(a)(ii), the Rights Agent shall return such
Right Certificate duly marked to indicate that such exercise has occurred.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock of the Company a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock of the Company) in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
26
30
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 is not prohibited by Section 11(n) 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 is not prohibited by the proviso at the end of the first sentence of
Section 11(n) hereof) shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock of the Company 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, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage 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 other Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by the proviso at the end of the first sentence of Section 11(n)
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
have the right to receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined in Section
13(b)), free and clear of rights of call or first refusal, liens, encumbrances,
transfer restrictions or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event, and dividing
that product by (2) 50% of the Fair Market Value (determined pursuant to Section
11(d) hereof) per share of the Common Stock of such Principal Party on the date
of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale, mortgage or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Rights in accordance with this Section
13(a) and the making of payments in cash and/or other securities in accordance
with Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights.
27
31
(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 into which shares
of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the
issuer of Common Stock that has the highest aggregate Fair
Market Value (determined pursuant to Section 11(d)), and if no
securities are so issued, the Person that is the other party
to the merger or consolidation, or, if there is more than one
such Person, the Person the Common Stock of which has the
highest aggregate Fair Market Value (determined pursuant to
Section 11(d)); 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, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the
largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the
highest aggregate Fair Market Value (determined pursuant to
Section 11(d));
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act ("Registered Common
Stock"), or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary or Affiliate of another Person who has Registered Common
Stock outstanding, "Principal Party" shall refer to such other Person; (2) if
the Common Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Principal Party" shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other Persons is
the issuer of the Registered Common Stock having the highest aggregate Fair
Market Value (determined pursuant to Section 11(d)); and (4) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, "Principal Party" shall refer to
whichever ultimate parent entity is the entity having the greatest net assets.
28
32
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) the Principal Party shall have
a sufficient number of authorized shares of its 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 (y) the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), the Principal Party at its own expense 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, cause such registration statement to become
effective as soon as practicable after such filing and cause
such registration statement to remain effective (with a
prospectus that at all times meets the requirements of the
Securities Act) until the Expiration Date;
(ii) qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or
appropriate;
(iii) list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on
a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ; and
(iv) 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) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current Fair Market
Value (determined pursuant to Section 11(d)) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such Fair
Market Value, or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of this Section 13, then, in such event, the
Company shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental
29
33
agreement providing that the provision in question of such Principal Party shall
have been canceled, waived or amended, or that the authorized securities shall
be redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(o)
hereof, or to distribute Right Certificates which evidence fractional Rights. If
the Company elects not to issue such fractional Rights, the Company shall pay,
in lieu of such fractional Rights, 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 Fair Market Value
of a whole Right, as determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may 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 Fair Market Value of one one-thousandth of a share of Preferred
Stock. For purposes of this Section 14(b), the Fair Market Value of one
one-thousandth of a share of Preferred Stock shall be determined pursuant to
Section 11(d) hereof for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common Stock
of the Company), may, in such registered holder's own behalf and for such
registered holder's own benefit,
30
34
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 Right 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 shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Right Certificate
(or, prior to the Distribution Date, the associated certificate representing
Common Stock of the Company) 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 certificate representing
Common Stock of the Company made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and, subject to the last sentence of Section
7(e), neither the Company nor the Rights Agent shall be affected by any notice
to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as the 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 obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
31
35
Section 17. Right Certificate Holder Not Deemed a Shareholder. 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 shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, 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 to in writing 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 reasonable expenses and counsel fees and
disbursements 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, incurred without
gross 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, directly
or indirectly. The provisions of this Section 18(a) shall survive the expiration
of the Rights and the termination of this Agreement.
(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 representing Common Stock of the Company, Preferred
Stock, or other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it in good faith
and without negligence to be genuine and to be signed and executed by the proper
Person or Persons.
(c) The Rights Agent shall not be liable for consequential
damages under any provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder.
32
36
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 the corporate trust or shareholder services 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 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor 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 expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (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 of any Acquiring Person and
the determination of "Fair Market Value") 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 shall be herein
33
37
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the
Chairman of the Board of Directors, a Vice Chairman of the Board of Directors,
the President, a Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this 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 change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Sections 11, 13 or 23(c) hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of the Fair Market Value
of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; 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
of the Company or Preferred Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Common Stock of the Company or
Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered
34
38
pursuant to any provision hereof from any person believed by the Rights Agent to
be the Chairman of the Board of Directors, any Vice Chairman of the Board of
Directors, the President, a Vice President, the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer of the Company, and is
authorized to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer. Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Agreement and the
date on or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than five (5) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this 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.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate 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 clause
(2) thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
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 thirty (30) days'
35
39
notice in writing mailed to the Company by first class mail. The Company may
remove the Rights Agent or any successor Rights Agent (with or without cause)
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock of the Company and Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (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 incumbent Rights Agent or
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of the State of New York (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, which is authorized under such laws to
exercise stock transfer or corporate trust powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an Affiliate of a corporation described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock of the Company and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
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 the Board of Directors of the Company to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock of
the Company 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 of the Company so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon
36
40
the exercise, conversion or exchange of securities hereafter 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
the person to whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.01 per Right, appropriately adjusted to reflect any dividend
declared or paid on the Common Stock of the Company in shares of Common Stock of
the Company or any subdivision or combination of the outstanding shares of
Common Stock of the Company or similar event occurring after the date of this
Agreement (such redemption price, as adjusted from time to time, being
hereinafter referred to as the "Redemption Price"). The Rights may be redeemed
only until the earliest to occur of (i) the time at which any Person becomes an
Acquiring Person or (ii) the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights in accordance with Section 23
hereof, 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.
Promptly after the action of the Board of Directors of the Company ordering the
redemption of the Rights in accordance with Section 23 hereof, the Company shall
give notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders 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 of the Company. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set forth in
this Section 23 or Section 24 hereof or in connection with the purchase of
shares of Common Stock of the Company prior to the Distribution Date.
37
41
(c) The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock of the Company (based on the Fair Market Value
of the Common Stock of the Company as of the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors of the
Company.
Section 24. Exchange.
(a) (i) 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 of the Company at an exchange ratio
of one share of Common Stock of the Company per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as
the "Section 24(a)(i) Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be
empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of
50% or more of the Common Stock of the Company.
(ii) Notwithstanding the foregoing, 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
of the Company at an exchange ratio specified in the following
sentence, as appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after
the date of this Agreement. Subject to the adjustment
described in the foregoing sentence, each Right may be
exchanged for that number of shares of Common Stock of the
Company obtained by dividing the Spread (as defined in Section
11(a)(iii)) by the then Fair Market Value per one
one-thousandth of a share of Preferred Stock on the earlier of
(x) the date on which any person becomes an Acquiring Person
or (y) the date on which a tender or exchange offer by any
Person (other than an Exempt Person) is first published or
sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act or any successor rule, if upon consummation
thereof such Person would be the Beneficial Owner of 10% or
more of the shares of Common Stock of the Company then
outstanding (such exchange ratio being referred to herein as
the "Section 24(a)(ii) Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be
empowered to effect such exchange at any time after any Person
(other than an Exempt Person), together with all
38
42
Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock of the
Company.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
of the Company equal to the number of such Rights held by such holder multiplied
by the Section 24(a)(i) Exchange Ratio or the Section 24(a)(ii) Exchange Ratio,
as applicable. The Company shall promptly give notice of any such exchange in
accordance with Section 26 hereof; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock of the Company for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or Preferred Stock Equivalent, as
such term is defined in Section 11(b) hereof) for Common Stock of the Company
exchangeable for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or Preferred Stock Equivalent) for each share of Common Stock
of the Company, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock of the Company shall have the same voting rights as one share of Common
Stock of the Company.
(d) In the event that there shall not be sufficient shares of
Common Stock of the Company or Preferred Stock (or Preferred Stock Equivalent)
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 of the Company or Preferred Stock (or Preferred Stock Equivalent)
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Stock of the Company or to distribute certificates which evidence
fractional shares of Common Stock of the Company. If the Company elects not to
issue such fractional shares of Common Stock of the Company, the Company shall
pay, in lieu of such fractional shares of Common Stock of the Company, to the
registered holders of the Right Certificates with regard to which such
39
43
fractional shares of Common Stock of the Company would otherwise be issuable, an
amount in cash equal to the same fraction of the Fair Market Value of a whole
share of Common Stock of the Company. For the purposes of this paragraph (e),
the Fair Market Value of a whole share of Common Stock of the Company shall be
the closing price of a share of Common Stock of the Company (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
40
44
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 Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with, or to effect any sale, mortgage or other transfer (or to
permit one or more of its Subsidiaries to effect any sale, mortgage or other
transfer), in one transaction or a series of related 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 (other than a Subsidiary of the Company in one
or more transactions each of which is not prohibited by the proviso at the end
of the first sentence of Section 11(n) hereof, and other than pursuant to the
Merger Agreement, (v) to effect the liquidation, dissolution or winding up of
the Company, or (vi) to declare or pay any dividend on the Common Stock of the
Company payable in Common Stock of the Company or to effect a subdivision,
combination or consolidation of the Common Stock of the Company (by
reclassification or otherwise than by payment of dividends in Common Stock of
the Company) then in each such case, the Company shall give to each holder of a
Right Certificate and to the Rights Agent, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock of the
Company and/or Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least twenty (20) days prior to the record date for determining holders of
the shares of Preferred 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 of the Company and/or Preferred Stock, whichever
shall be the earlier; provided, however, no such notice shall be required
pursuant to this Section 25 as a result of any Subsidiary of the Company
effecting a consolidation or merger with or into, or effecting a sale or other
transfer of assets or earnings power to, any other Subsidiary of the Company in
a manner not inconsistent with the provisions of this Agreement.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.
41
45
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, by facsimile transmission or by nationally recognized
overnight courier addressed (until another address is filed in writing with the
Rights Agent) as follows:
Interstate Hotels Management, Inc.
000 Xxxxxxxx Xxxxx, Xxxxxx Xxxxx Ten
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Secretary
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 sufficiently given or made if
sent by first-class mail, postage prepaid, by facsimile transmission or by
nationally-recognized overnight courier addressed (until another address is
filed in writing with the Company) as follows:
[TRANSFER AGENT]
-------------------------
-------------------------
Attention: Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock of the Company) 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 time at which any
Person becomes an Acquiring Person, the Company and the Rights Agent shall, if
the Board of Directors of the Company so directs, supplement or amend any
provision of this Agreement as the Board of Directors of the Company may deem
necessary or desirable without the approval of any holders of certificates
representing shares of Common Stock of the Company. From and after the time at
which any Person becomes an Acquiring Person, the Company and the Rights Agent
shall, if the Board of Directors of the Company so directs, supplement or amend
this Agreement without the approval of any holder of Right 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 hereof in any manner which the Board of Directors of
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 any Affiliate or Associate of an Acquiring Person); provided, however,
that from and after the time at which any Person becomes an Acquiring Person
this Agreement may not
42
46
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 as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and the benefits to, the holders of Rights (other than an Acquiring
Person or any Affiliate or Associate of an Acquiring Person). Upon the delivery
of such 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. Prior
to the time at which any Person becomes an Acquiring Person, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock of the Company. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 27 which alters the Rights Agent's rights or
duties.
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.
(a) For all purposes of this Agreement, any calculation of the
number of shares of Common Stock of the Company outstanding at any particular
time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of the Company 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 Rules under the Exchange Act as in effect on the date
hereof.
(b) The Board of Directors of the Company, acting pursuant to
a resolution adopted by the affirmative vote of a majority of the Board of
Directors in accordance with the Bylaws of the Company, shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or the
Company pursuant to this Agreement, or as may be necessary or advisable in the
administration of this Agreement, including without limitation the right and
power to (i) interpret the provisions of this Agreement, (ii) make all
adjustments, calculations and determinations required or permitted to be made in
accordance with the terms of this Agreement, (iii) take any and all actions
required or permitted to be taken in accordance with the terms of this
Agreement, and (iv) make any and all other determinations deemed necessary or
desirable for the administration of this Agreement. All such actions,
calculations, adjustments, 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 of
43
47
Directors of the Company or any member thereof to any liability to the holders
of the Rights or to any other person.
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 Common Stock of the Company) 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,
registered holders of the Common Stock of the Company).
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 from the Agreement would adversely affect the purpose or effect
of the 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 of the
Company.
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 Maryland 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 to be performed entirely within Maryland.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[Remainder of page intentionally left blank.]
44
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an instrument under seal and attested, all as of the day and
year first above written.
ATTEST: INTERSTATE HOTELS MANAGEMENT, INC.
By: By:
---------------------------- -------------------------------
Name:
Title:
ATTEST: [TRANSFER AGENT], as Rights Agent
By: By:
---------------------------- -------------------------------
Name:
Title:
