RIGHTS AGREEMENT
DATED AS OF MARCH 4, 1997
BY AND BETWEEN
MAGNETEK, INC.
AND
THE BANK OF NEW YORK
AS RIGHTS AGENT
TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions....................................... 1
Section 2. Appointment of Rights Agent............................... 6
Section 3. Issuance of Right Certificates............................ 6
Section 4. Form of Right Certificates................................ 7
Section 5. Countersignature and Registration......................... 8
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.............. 8
Section 7. Exercise of Rights........................................ 9
Section 8. Cancellation and Destruction of Right Certificates........10
Section 9. Reservation and Availability of Capital Stock.............11
Section 10. Securities Record Date....................................11
Section 11. Adjustment of Exercise Price, Number of Shares
Issuable Upon Exercise of Rights or Number
of Rights.................................................12
Section 12. Certificate of Adjusted Exercise Price or
Number of Shares Issuable Upon Exercise of Rights.........16
Section 13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power...................................16
Section 14. Fractional Rights and Fractional Shares...................18
Section 15. Rights of Action..........................................19
Section 16. Agreement of Right Holders................................19
Section 17. Right Holder and Right Certificate Holder
Not Deemed a Stockholder..................................20
Section 18. Concerning the Rights Agent...............................20
Section 19. Merger or Consolidation or Change of Name
of Rights Agent...........................................21
Section 20. Duties of Rights Agent....................................21
Section 21. Change of Rights Agent....................................23
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Section 22. Issuance of New Right Certificates........................23
Section 23. Redemption of Rights......................................23
Section 24. Exchange of Rights........................................24
Section 25. Notice of Certain Events..................................25
Section 26. Notices...................................................25
Section 27. Supplements and Amendments................................26
Section 28. Certain Covenants.........................................26
Section 29. Successors................................................27
Section 30. Benefits of this Agreement................................27
Section 31. Severability..............................................27
Section 32. Governing Law.............................................27
Section 33. Counterparts..............................................27
Section 34. Descriptive Headings......................................27
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TABLE OF EXHIBITS
Exhibit A Form of Right Certificate
iii
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of the
4th day of March, 1997 by and between MagneTek, Inc., a Delaware corporation
(the "Company"), and The Bank of New York (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company, which dividend is
payable on March 17, 1997 (the "Record Date") to the holders of record of
Common Shares as of the Close of Business (as hereinafter defined) on such
date;
WHEREAS, the Board of Directors of the Company has further authorized
and directed the issuance of one (subject to adjustment of such number as
provided in this Agreement) Right for (A) each Common Share that shall be
issued by the Company at any time after the Record Date and prior to the
earliest of the date of the first Section 11(a)(ii) Event, the date of the
first Section 13(a) Event, the Redemption Date or the Expiration Date (as
such terms are hereinafter defined), and (B) each Common Share that shall be
issued by the Company at any time on or after the earlier of the date of the
first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Expiration Date
pursuant to the exercise of conversion rights, exchange rights, rights (other
than Rights), warrants or options that shall have been issued or granted
prior to the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event, unless the Board of Directors shall
provide otherwise at the time of the issuance or grant of such conversion
rights, exchange rights, rights (other than Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein, the Company
desires to appoint the Rights Agent to act on behalf of the Company for the
benefit of the holders of Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, and for the benefit of the holders of
Rights, the parties hereto hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as
in effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated
under the Exchange Act, in each case as in effect on the date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance
regulatory requirements, the fulfillment of a condition, or otherwise)
with pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise, provided that a Person shall
not be deemed the Beneficial Owner of, or to Beneficially Own, securities
tendered pursuant to a tender offer 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;
(iii) any securities that such Person or any of such
Person's Affiliates or Associates has the right to vote, alone or in
concert with others, pursuant to any agreement, arrangement or
understanding, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (A) arises solely from a
revocable proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to and
in accordance with the applicable rules and regulations of the Exchange
Act, and (B) is not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to
Section 1(b)(iii) hereof) or disposing of any securities of the Company;
and
(v) on any day on or after the Distribution Date, all
Rights that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a
Person engaged in business as an underwriter of securities shall not be deemed
to be the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the States of New York or Tennessee
are authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., New York City time, on such date; PROVIDED, HOWEVER, that if such date
is not a Business Day, it shall mean 5:00 o'clock p.m., New York City time,
on the next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New
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York Stock Exchange or, if such stock or other security is 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
stock or other security is listed or admitted to trading or, if such stock or
other security is not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use or, if on any
such date such stock or other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker that makes a market in such stock or other
security and that is selected by the Board of Directors of the Company.
(f) "Common Share" shall mean one share of the Common Stock, par
value $.01 per share, of the Company, unless used with reference to a Person
other than the Company, in which case it shall mean one share of the class of
capital stock (or equity interest) of such other Person having the greatest
voting power per share or, if such Person is a Subsidiary of another Person, of
the Person that ultimately controls such Person.
(g) "Common Share Equivalent" shall have the meaning ascribed to it
in Section 11(a)(iii) hereof.
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; PROVIDED,
HOWEVER, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors of the Company in order to make the Closing Price on each
Trading Day during the period used for the determination of the Current Market
Price fully comparable with the Closing Price on such date in question (or, if
applicable, the immediately preceding Trading Day). "Current Market Price" per
share of any stock or unit of such other security that is not publicly held or
so listed or traded, and "Current Market Price" of any other property, shall
mean the fair value per share of such stock or unit of such other security, or
the fair value of such other property, respectively, as determined in good faith
by the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors shall in good
faith determine appropriate, which determination shall be described in a
statement filed by the Company with the Rights Agent. Notwithstanding the
foregoing, for purposes of Section 11 hereof "Current Market Price Per Share" as
to Preferred Shares shall be determined as set forth in Section 11(d).
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exchange Ratio" shall have the meaning ascribed to it in
Section 24(a) hereof.
(l) "Exempt Person" shall mean the Company, any wholly-owned
Subsidiary of the Company, any employee benefit plan of the Company or of a
Subsidiary of
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the Company, and any Person holding Voting Shares for or pursuant to the
terms of any such employee benefit plan.
(m) "Exercise Price" shall have the meaning ascribed to it in
Section 7(c) hereof.
(n) "Expiration Date" shall mean March 3, 2000, unless the
Distribution Date shall occur on or prior to such date, in which case
"Expiration Date" shall mean March 3, 2007.
(o) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 promulgated
under the Exchange Act as in effect on the date hereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(p) "Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company, which has the rights and preferences set forth in the Certificate of
Designations filed with the Secretary of State of the State of Delaware on
November 15, 1993.
(q) "Preferred Share Equivalents" shall have the meaning ascribed to
it in Section 11(b) hereof.
(r) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(s) "Redemption Date" shall mean the date of the action of the Board
of Directors of the Company authorizing and directing the redemption of the
Rights pursuant to Section 23(a) hereof or the exchange of the Rights pursuant
to Section 24(a) hereof.
(t) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(u) "Right" shall have the meaning ascribed to it in the recitals
hereto.
(v) "Rights Agent" shall have the meaning ascribed to it in the
recitals hereto.
(w) "Section 11(a)(ii) Event" shall have the meaning ascribed to it
in Section 11(a)(ii) hereof.
(x) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(aa) "Surviving Person" shall have the meaning ascribed to it in
Section 13(a) hereof.
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(bb) "Trading Day" shall mean, as to any stock or other security, a
day on which the principal national securities exchange on which such stock or
other security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(cc) "Unavailable Adjustment Shares" has the meaning ascribed to it in
Section 11(a)(iii) hereof.
(dd) "Voting Share" shall mean (i) a Common Share of the Company and
(ii) any other share of capital stock of the Company entitled to vote generally
in the election of directors or entitled to vote together with the Common Shares
in respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
(ee) "15% Ownership Date" shall mean the first date after the
declaration by the Board of Directors referred to in the first recital hereto of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or a 15% Stockholder containing the facts by virtue of which
a Person has become a 15% Stockholder.
(ff) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter becomes the Beneficial Owner
of such number of Voting Shares of the Company as constitutes a percentage of
the then outstanding Voting Shares that is equal to or greater than 15%;
PROVIDED, HOWEVER, that the term "15% Stockholder" shall not include: (i) an
Exempt Person or (ii) any Person if such Person would not otherwise be a 15%
Stockholder but for a reduction in the number of outstanding Voting Shares
resulting from a stock repurchase program or other similar plan of the Company
or from a self-tender offer of the Company, which plan or tender offer commenced
on or after the date hereof, PROVIDED, HOWEVER, that the term "15% Stockholder"
shall include such Person from and after the first date upon which (A) such
Person, since the date of the commencement of such plan or tender offer, shall
have acquired Beneficial Ownership of, in the aggregate, a number of Voting
Shares of the Company equal to 1% or more of the Voting Shares of the Company
then outstanding and (B) such Person, together with all Affiliates and
Associates of such Person, shall Beneficially Own 15% or more of the Voting
Shares of the Company then outstanding. In calculating the percentage of the
outstanding Voting Shares that are Beneficially Owned by a Person for purposes
of this subsection (ff), Voting Shares that are Beneficially Owned by such
Person shall be deemed outstanding, and Voting Shares that are not Beneficially
Owned by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights (other than
Rights), warrants or options shall not be deemed outstanding. Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person that would otherwise be a 15% Stockholder pursuant to the
foregoing provisions of this Section 1(ff) and Section 1(b) hereof has become
such inadvertently, and such Person (a) promptly notifies the Board of Directors
of such status and (b) as promptly as practicable thereafter, either divests of
a sufficient number of Voting Shares so that such Person would no longer be a
15% Stockholder, or causes any other circumstance, such as the existence of an
agreement respecting Voting Shares, to be eliminated such that such Person would
no longer be a 15% Stockholder as defined pursuant to this Section 1(ff) and
1(b), then such Person shall not be deemed to be a 15% Stockholder for any
purposes of this Agreement. Any determination
5
made by the Board of Directors of the Company as to whether any Person is or
is not a 15% Stockholder shall be conclusive and binding upon all holders of
Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such co-
Rights Agents as it may deem necessary or desirable, upon ten days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earliest of (i) the tenth Business Day (or such later day as shall
be designated by the Board of Directors of the Company) following the date of
the commencement of, or the first public announcement of the intent of any
Person, other than an Exempt Person, to commence a tender offer or exchange
offer, the consummation of which would cause any Person to become a 15%
Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii) the
date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented
by certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send, at the Company's
expense, by first-class, postage-prepaid mail to each record holder of Common
Shares, as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit A hereto representing one Right for each
Common Share so held. From and after the Distribution Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer agent or registrar for
such Rights, shall be the record holders of such Rights.
(d) Certificates for Common Shares issued at any time after the
Record Date and prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
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"This certificate also represents Rights that entitle the
holder hereof to certain rights as set forth in a Rights
Agreement dated as of March 4, 1997 by and between the
Corporation and The Bank of New York, as Rights Agent (the
"Rights Agreement"), the terms and conditions of which are hereby
incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Corporation.
Under certain circumstances specified in the Rights
Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this
certificate. Under certain circumstances specified in the Rights
Agreement, Rights beneficially owned by certain persons may
become null and void. The Corporation will mail to the record
holder of this certificate a copy of the Rights Agreement without
charge promptly following receipt of a written request therefor."
(e) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
"This certificate does not represent any Right issued
pursuant to the terms of a Rights Agreement dated as of March 4,
1997 by and between the Corporation and The Bank of New York, as
Rights Agent."
(f) In the event that at any time on or after the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event, then,
unless the Board of Directors of the Company shall have provided otherwise at
the time of the issuance or grant of such conversion rights, exchange rights,
rights (other than Rights), warrants or options, the Rights Agent shall, as soon
as practicable after the date of such event, send by first-class, postage-
prepaid mail to the record holder of such Common Shares, at the address of such
holder as shown on the records of the Company, a Right Certificate substantially
in the form of Exhibit A hereto representing one Right for each Common Share so
issued.
(g) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 15% Stockholder or any
of its Affiliates or Associates or to any Person if the Rights held by such
Person are Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. Any determination made by the Board of Directors of the Company as
to whether any Common Shares are or were Beneficially Owned at any time by a
15% Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates and
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and if
issued, shall be substantially the same as Exhibit A 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 or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company
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issuable upon exercise of the Rights may from time to time be listed, or to
conform to usage. Subject to Section 22 hereof, Right Certificates, whenever
issued, that are issued in respect of Common Shares that were issued and
outstanding as of the Close of Business on the Distribution Date, shall be
dated as of the Distribution Date.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer or any Vice President,
either manually or by facsimile signature, and may have affixed thereto the
Company's seal or a facsimile thereof attested by its Secretary or any Assistant
Secretary, either manually or by facsimile signature. The Right Certificates
shall be countersigned by an authorized signatory of the Rights Agent (which
need not be the same authorized signatory for all of the Right Certificates) and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may
nevertheless 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. Any Right Certificate may be signed on behalf of the Company by
any person who at the actual date of such execution shall be a proper officer of
the Company to sign such Right Certificate, even though such person was not such
an officer at the date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its offices in New York, New York, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of Right Certificates, the
number of Rights represented on its face by each Right Certificate and the date
of each Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14
hereof, at any time after the Close of Business on the Distribution Date, and
so long as the Rights represented thereby remain outstanding, any one or more
Right Certificates may be transferred, split up, combined or exchanged for
one or more Right Certificates representing the same aggregate number of
Rights as the Right Certificates surrendered. Any registered holder desiring
to transfer, split up, combine or exchange one or more Right Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed and such other and further documentation
as the Rights Agent may reasonably request. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto one or more Right
Certificates, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably
8
satisfactory to them and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of such Right
Certificate, if mutilated, along with signature guarantees and such other and
further documentation as the Rights Agent may reasonably request, the Company
shall issue and deliver to the Rights Agent for delivery to the record holder
of such Right Certificate a new Right Certificate of like tenor in lieu of
such lost, stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions
of this Agreement, at any time after the Close of Business on the Distribution
Date and prior to the Close of Business on the earlier of the Redemption Date or
the Expiration Date, the registered holder of any Right Certificate may exercise
the Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, to the Rights Agent at the
office of the Rights Agent in New York, New York, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request, together with payment of the Exercise Price for each Right
exercised. Upon the exercise of an exercisable Right and payment of the
Exercise Price in accordance with the provisions of this Agreement, the holder
of such Right shall be entitled to receive, subject to adjustment as provided
herein, one one-thousandth of a Preferred Share (or, following the occurrence of
a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares, other
securities cash and/or other property in accordance with the provisions of this
Agreement).
(c) The Exercise Price for the exercise of each Right shall initially
be $60 (sixty dollars) and shall be payable in lawful money of the United States
of America in accordance with Section 7(f) hereof. The Exercise Price and the
number of Preferred Shares (or, following the occurrence of a Section 11(a)(ii)
Event or a Section 13(a) Event, Common Shares, cash and/or other property in
accordance with the provisions of this Agreement) to be acquired upon exercise
of a Right shall be subject to adjustment from time to time as provided in
Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event, any Rights that are or were Beneficially
Owned by a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder at
any time on or after the Distribution Date shall be null and void, and for all
purposes of this Agreement such Rights shall thereafter be deemed not to be
outstanding, and any holder of such Rights (whether or not such holder is a
15% Stockholder or an Affiliate or Associate of a 15% Stockholder) shall
thereafter have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the
9
Preferred Shares that would otherwise be issuable (after the Close of
Business on the Distribution Date) upon the exercise of each Right and
payment of the Exercise Price, (i) cash, (ii) other equity securities of the
Company, (iii) debt securities of the Company, (iv) other property or (v) any
combination of the foregoing, in each case having an aggregate Current Market
Price equal to the aggregate Current Market Price of the Preferred Shares for
which substitution is made. Subject to Section 7(d) hereof, in the event
that the Company takes any action pursuant to this Section 7(e), such action
shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the transfer agent of the Preferred Shares (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event,
Common Shares, other securities, cash and/or other property in accordance with
the provisions of this Agreement), certificates for the number of Preferred
Shares (or such other securities) to be purchased, and the Company hereby
irrevocably authorizes such transfer agent to comply with all such requests,
and/or, as provided in Section 14 hereof, requisition from the depositary agent
described therein depositary receipts representing such number of one-
thousandths of a Preferred Share (or such other securities) as are to be
purchased (in which case certificates for the Preferred Shares (or such other
securities) represented by such receipts shall be deposited by the transfer
agent with such depositary agent) and the Company hereby directs such depositary
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional
Preferred Shares (or such other securities) in accordance with Section 14
hereof, (iii) after receipt of such certificates, depositary receipts or cash,
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 thereof, deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; PROVIDED, HOWEVER, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
10
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 CAPITAL STOCK.
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued equity securities held in its treasury),
the number of such equity securities that will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise
of the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable state securities laws and to keep such registration effective until
the earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered for
exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
(f) With respect to the Common Shares and/or other securities
issuable pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants
shall be applicable only upon and following the occurrence of a
Section 11(a)(ii) Event.
Section 10. SECURITIES RECORD DATE. Each person in whose name any
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate representing 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 securities transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such securities on, and such
certificate shall
11
be dated, the next succeeding Business Day on which the securities transfer
books of the Company are open.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE
UPON EXERCISE OF RIGHTS OR NUMBER OF RIGHTS. The Exercise Price, the number and
kind of securities that may be purchased upon exercise of a 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 that the Company shall at any time after the
Close of Business on the Record Date and prior to the Close of Business on
the earlier of the Redemption Date or the Expiration Date (A) declare or
pay any dividend on the Preferred Shares payable in Preferred Shares or
Voting Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares
or (D) issue Preferred Shares or Voting Shares in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, and upon each such event, the number and kind of
Preferred Shares or other securities issuable upon the exercise of a Right
on the date of such event shall be proportionately adjusted so that the
holder of any Right exercised on or after such date shall be entitled to
receive, upon the exercise thereof and payment of the Exercise Price, the
aggregate number and kind of Preferred Shares or other securities or other
property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was
exercisable and the transfer books of the Company were open, such holder
would have owned upon such exercise and would have been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15%
Ownership Date shall have occurred and neither the Redemption Date nor the
Expiration Date shall have occurred prior to the tenth Business Day
following such 15% Ownership Date, then, and effective as of the end of
such tenth Business Day, proper provision shall be made so that except as
provided in Section 7(d) hereof, each holder of a Right shall thereafter
have the right to receive, upon the exercise thereof in accordance with the
terms of this Agreement and payment of the then current Exercise Price, in
lieu of the securities or other property otherwise purchasable upon such
exercise, such number of Common Shares of the Company as shall equal the
result obtained by multiplying the then current Exercise Price by the then
number of one-thousandths of a Preferred Share for which a Right was
exercisable (or, if the Distribution Date shall not have occurred prior to
the date of such Section 11(a)(ii) Event, the number of one-thousandths of
a Preferred Share for which a Right would have been exercisable if the
Distribution Date had occurred on the Business Day immediately preceding
the date of such Section 11(a)(ii) Event) immediately prior to such
Section 11(a)(ii) Event, and dividing that product by 50% of the Current
Market Price (determined pursuant to Section 11(d) hereof) of a Common
Share on the date of occurrence of the relevant Section 11(a)(ii) Event
(such number of shares being hereinafter referred to as the "Adjustment
Shares"). Successive adjustments shall be made pursuant to this paragraph
each time a Section 11(a)(ii) Event occurs.
12
(iii) In the event that on the date of a
Section 11(a)(ii) Event the aggregate number of Common Shares that are
authorized by the Company's Restated Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is less than the aggregate number of Adjustment Shares
thereafter issuable upon the exercise in full of the Rights in accordance
with Section 11(a)(ii) hereof (the excess of such number of Adjustment
Shares over and above such number of Common Shares being hereinafter
referred to as the "Unavailable Adjustment Shares"), then, and upon each
such event, the Company shall substitute for the pro rata portion of the
Unavailable Adjustment Shares that would otherwise be issuable thereafter
upon the exercise of each Right and payment of the Exercise Price,
(A) cash, (B) other equity securities of the Company (including, without
limitation, shares of preferred stock of the Company or units of such
shares having the same Current Market Price as one Common Share (a "Common
Share Equivalent")), (C) debt securities of the Company, (D) other property
or (E) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
Unavailable Adjustment Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action
pursuant to this Section 11(a)(iii), such action shall apply uniformly to
all outstanding Rights.
(b) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, 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 equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current Market Price, and the denominator of
which shall be equal to the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or Preferred
Share Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); PROVIDED,
HOWEVER, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of a
specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment shall
be made as if the record date for the issuance of such rights, options or
warrants had been the business day immediately preceding the date upon which
such rights, options or warrants became exercisable. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment to the Exercise Price 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 that would then be in effect if such record date had
not been fixed.
13
(c) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under
Section 11(a)(i) or (b) hereof or a regular quarterly cash dividend), then 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 equal to the excess of the
Current Market Price per Preferred Share on such record date over and above the
fair market value of the portion of the securities or assets to be so
distributed with respect to one Preferred Share, and the denominator of which
shall be equal to such Current Market Price per Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such a distribution is not so made, the Exercise Price shall
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 1,000.
(e) 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 that by reason of this
Section 11(e) are not required to be made shall be cumulated and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-thousandth of a Common
Share or other share or one-millionth of a Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-thousandths of a
Preferred Share 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) below, upon each adjustment of the Exercise Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-thousandths of a Preferred Share (calculated to the nearest one-millionth of
a Preferred Share) obtained by multiplying (i) the number of one-thousandths of
a Preferred Share purchasable upon the exercise of one Right immediately prior
to such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such
14
adjustment, and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-thousandths of a Preferred
Share 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 one-thousandth of a
Right) obtained by dividing the Exercise Price in effect immediately prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate 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 representing, 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, 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 such adjustment, and upon surrender thereof if required by
the Company, new Right Certificates representing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted 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-thousandths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-thousandth of a Preferred Share and
the number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-thousandth of the then par value, if any, of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-thousandths of a Preferred Share 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 issuance to the holder of any Right exercised after such record date
of the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise
15
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
representing 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 further adjustments in the number of one-
thousandths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that it
in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly
for cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that the Company shall, at any time after the Close
of Business on the Record Date and prior to the Close of Business on the
earliest of the date of the first Section 11(a)(ii) Event, the date of the first
Section 13(a) Event, the Redemption Date or the Expiration Date, (i) pay any
dividend on the Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, (iii) combine the outstanding Common Shares into a
smaller number of Common Shares or (iv) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the Exercise Price to
be in effect after such event shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by a fraction, the numerator of
which shall be equal to the number of Common Shares outstanding immediately
prior to such event and the denominator of which shall be equal to the number of
Common Shares outstanding immediately after such event. Successive adjustments
shall be made pursuant to this Section 11(n) each time such a dividend is paid
or such a subdivision, combination or reclassification is effected. If an event
occurs that would require an adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(n)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES ISSUABLE UPON EXERCISE OF RIGHTS. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 25 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or to give such notice
shall not affect the validity or the force and effect of such adjustment. Any
adjustment to be made pursuant to Sections 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 15% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date,
16
(1) the Company shall, directly or indirectly, consolidate with or merge with
and into any other Person and the Company shall not be the continuing or
surviving corporation in such consolidation or merger, (2) any Person shall,
directly or indirectly, consolidate with or merge with and into the Company
and the Company shall be the continuing or surviving corporation in such
merger and, in connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or
more of its Subsidiaries shall, directly or indirectly, sell or otherwise
transfer, in one or more transactions (other than transactions in the
ordinary course of business), assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons other than the Company or one or more of
its wholly owned Subsidiaries (such Persons, together with the Persons
described in clauses (1) and (2) above shall be collectively referred to in
this Section 13 as the "Surviving Person"), then, and in each such case,
proper provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each holder
of a Right shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of the
then current Exercise Price, in lieu of the securities or other property
otherwise purchasable upon such exercise, such number of validly authorized
and issued, fully paid and nonassessable Common Shares of the Surviving
Person as shall be equal to a fraction, the numerator of which is the
product of the then current Exercise Price multiplied by the number of one-
thousandths of a Preferred Share purchasable upon the exercise of one Right
immediately prior to the first Section 13(a) Event (or, if the Distribution
Date shall not have occurred prior to the date of such Section 13(a) Event,
the number of one-thousandths of a Preferred Share that would have been so
purchasable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 13(a) Event, or, if a
Section 11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-thousandths of a Preferred Share purchasable
upon the exercise of a Right (or, if the Distribution Date shall not have
occurred prior to the date of such Section 11(a)(ii) Event, the number of
one-thousandths of a Preferred Share that would have been so purchasable if
the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 11(a)(ii) Event) immediately prior to
such Section 11(a)(ii) Event, multiplied by the Exercise Price in effect
immediately prior to such Section 11(a)(ii) Event), and the denominator of
which is 50% of the Current Market Price per Common Share of the Surviving
Person on the date of consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term, "Company," shall thereafter be deemed to
refer to the Surviving Person; and
(iv) the Surviving Person shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof shall
thereafter be applicable to its Common Shares thereafter deliverable upon
the exercise of Rights.
17
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction of each of the Rights equal to the fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the obligations of the Company as to the remaining fraction of each of the
Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(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, use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
and similarly comply with all applicable state securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the Common Shares of the Surviving Person purchasable
upon exercise of the Rights on a national securities exchange, or use its
best efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical
financial statements for such Surviving Person that comply in all respects
with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
(d) In the event that at any time after the occurrence of a
Section 11(a)(ii) Event some or all of the Rights shall not have been exercised
pursuant to Section 11 hereof prior to the date of a Section 13(a) Event, such
Rights shall thereafter be exercisable only in the manner described in
Section 13(a) hereof. In the event that a Section 11(a)(ii) Event occurs on or
after the date of a Section 13(a) Event, Rights shall not be exercisable
pursuant to Section 11 hereof but shall instead be exercisable pursuant to, and
only pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates that represent fractional Rights. If the
Company shall determine
18
not to issue such fractional Rights, the Company shall pay to the registered
holders of the Right Certificates with respect to which such fractional
Rights would otherwise be issuable, at the time such fractional Rights would
otherwise have been issued as provided herein, an amount in cash equal to the
same fraction of the Current Market Price of a whole Right on the Business
Day immediately prior to the date upon which such fractional Rights would
otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples of
one one-thousandth of a Preferred Share) upon exercise of Rights, or to
distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-thousandth
of a Preferred Share). Fractions of Preferred Shares in integral multiples of
one one-thousandth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such 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, and injunctive relief against actual or
threatened violations, of the obligations of any Person under 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 every other holder of a Right that:
19
(a) prior to the Distribution Date, the Rights shall be represented
by certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only
be transferable on the registry books of the Rights Agent if surrendered at
the principal stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority prohibiting or otherwise
restraining performance of such obligation.
Section 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon 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 or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented 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 the compensation
agreed to in writing by the Company and the Rights Agent for all services
rendered by it hereunder, as well as its reasonable out-of-pocket expenses. 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, without limitation, the costs and
expenses of defending against any claim of liability arising under this
Agreement. 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 for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper person or persons, or otherwise upon the
advice of its counsel as set forth in Section 20 hereof.
20
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 stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any instrument 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. If, 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 if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
(b) If 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 if 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 such 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 (and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent) upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance of the Rights, shall be
bound:
(a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the advice or
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 advice or 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 be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
21
(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 is serving as an administrative agent and
accordingly, shall not be under any responsibility in respect of the legality or
validity of any of the provisions of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery 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 any Rights becoming null
and void pursuant to Section 7(d) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in
Sections 7, 11, 13 and 23 hereof, or the ascertaining of the existence of facts
that would require any such change or adjustment (except with respect to the
exercise of Rights represented by Right Certificates after actual notice that
such change or adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares or other securities to be
issued pursuant to this Agreement or any Right Certificate, or as to whether any
Preferred Shares or Common Shares or other securities will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, any Vice
President, the Secretary, any Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while awaiting instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become 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, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) The Company agrees to give the Rights Agent prompt notice of
any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
22
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and Preferred Shares 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 as such, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
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
corporation organized and doing business under the laws of the United States or
of the States of New York or Tennessee (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 States of New York or Tennessee), in good standing,
having a principal office in New York or Tennessee, that is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. 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 Shares and Preferred Shares, 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 Right Certificates to the
contrary, the Company may, at its option (subject to Section 4 hereof), issue
new Right Certificates in such form as may be approved by the Board of Directors
in order to reflect any adjustment or change in the Exercise Price and the
number or kind or class of shares or other securities or property purchasable
upon exercise of the Rights in accordance with the provisions of this Agreement.
Section 23. REDEMPTION OF RIGHTS.
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, the Board of Directors of the Company may, at its option, authorize and
direct the redemption of all, but not less than all, of the then outstanding
Rights at a redemption price of $.001 per Right, as such redemption price shall
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights; PROVIDED, HOWEVER, that from and after the
first date upon which there shall exist a 15% Stockholder, any redemption of the
Rights shall require, in
23
addition to the approval of the Board of Directors of the Company, the
approval of a majority of those directors of the Company who were directors
prior to such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within 10 Business Days after
the date of such action, the Company shall give notice of such redemption to the
holders of Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives such notice, but
neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of such redemption. Each such notice of redemption
shall 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, directly
or indirectly, redeem, acquire or purchase for value any Rights in any manner
other than that specifically set forth in Section 24 hereof or in this
Section 23, and other than in connection with the purchase of Common Shares
prior to the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. EXCHANGE OF RIGHTS.
(a) At any time after the 15% Ownership Date and prior to the first
date thereafter upon which a 15% Stockholder, together with all Affiliates and
Associates of such 15% Stockholder, shall be the Beneficial Owner of 50% or more
of the Voting Shares then outstanding, the Board of Directors of the Company
may, at its option, authorize and direct the exchange of all, but not less than
all, of the then outstanding Rights for Common Shares at an exchange ratio (the
"Exchange Ratio") per Right, equal to that number of Common Shares which, as of
the date of the Board of Directors' action, has a Current Market Price equal to
the difference between the Exercise Price and the Current Market Price of the
Common Shares that each holder of a Right would otherwise have the right to
receive upon the exercise of a Right on such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right thereafter of the holders of
Rights shall be to receive a number of Common Shares equal to the Exchange
Ratio. Within 10 Business Days after the date of such action, the Company shall
give notice of such exchange to the holders of Rights by mailing such notice to
all holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives such notice, but neither the failure to give any such notice nor any
defect therein shall affect the legality or validity of such exchange. Each
such
24
notice of exchange shall state the method by which the Rights will be
exchanged for Common Shares. Neither the Company nor any of its Affiliates or
Associates may, directly or indirectly, redeem, acquire or purchase for value
any Rights in any manner other than (i) as specifically set forth in Section 23
hereof, (ii) as specifically set forth in this Section 24 or (iii) in connection
with the purchase of Common Shares prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute (i) cash, (ii) other equity securities of the Company
(including, but not limited to, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination of the
foregoing for the Common Shares exchangeable for Rights, as appropriately
adjusted. Subject to Section 7(d) hereof, in the event that the Company takes
any action pursuant to this Section 24, such action shall apply uniformly to all
outstanding Rights.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Shares or Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Common Shares or Preferred Shares options,
rights or warrants to subscribe for or to purchase any additional shares thereof
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Common Shares or Preferred Shares
(other than a reclassification involving only the subdivision of outstanding
shares), (iv) to effect any consolidation or merger with or into, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then and 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,
that shall specify the record date for the purpose of such dividend or
distribution, or the date upon 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 record of the Common
Shares or Preferred Shares, 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 20 days prior to the record date for determining holders of the Common
Shares or Preferred Shares for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares or Preferred Shares, whichever date shall be the earlier. The
failure to give the notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate and to the Rights Agent, in accordance with
Section 26 hereof, a notice of the occurrence of such event, specifying the
event and the consequences of the event to holders of Rights under Sections 11
and 13 hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the
25
Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
MagneTek, Inc.
00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) to the
principal stock transfer office of the Rights Agent as follows:
The Bank of New York
Stock Transfer Administration
000 Xxxxxxx Xxxxxx -- 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Assistant Vice President
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS.
(a) The Board of Directors of the Company may, from time to time,
before and after the Distribution Date, without the approval of any holders of
Rights, supplement or amend any provision of this Agreement in any manner,
whether or not such supplement or amendment is adverse to any holder of Rights,
and direct the Rights Agent so to supplement or amend such provision, and the
Rights Agent shall so supplement or amend such provision; PROVIDED, HOWEVER,
that from and after the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event, (iii) the Redemption Date
or (iv) the Expiration Date, this Agreement shall not be supplemented or amended
in any manner that would materially and adversely affect any holder of
outstanding Rights other than a 15% Stockholder or a Surviving Person; and
provided further, however, that from and after the first date upon which there
shall exist a 15% Stockholder, this Agreement shall not be supplemented or
amended in any manner without the approval of a majority of those directors of
the Company who were directors prior to such date.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not
effect any amendment to the Certificate of Designations for the Preferred Shares
that would materially and adversely affect the rights, privileges or preferences
of the Preferred Shares without the prior approval of the holders of two-thirds
or more of the then outstanding Rights.
(c) Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this section, the Rights Agent shall execute
such supplement or amendment. 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. CERTAIN COVENANTS. Subject to Section 27 hereof and the
other provisions of this Agreement, from and after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of
26
the Redemption Date or the Expiration Date, the Company shall not (a) issue
or sell, or permit any Subsidiary to issue or sell, to a 15% Stockholder or a
Surviving Person, or any Affiliate or Associate of a 15% Stockholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 15% Stockholder or a Surviving Person, (i) any
rights, options, warrants or convertible securities on terms similar to, or
that materially adversely affect the value of, the Rights or (ii) Preferred
Shares, Common Shares or shares of any other class of capital stock, if such
sale is intended to or would materially adversely affect the value of the
Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.
Section 29. 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 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) any legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
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.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state; PROVIDED, HOWEVER that with respect solely
to matters regarding the rights and obligations of the Rights Agent hereunder,
the laws of the State of New York shall govern.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart 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.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MAGNETEK, INC.
By:________________________________
Name:
Title
THE BANK OF NEW YORK
as Rights Agent
By:________________________________
Name:
Title:
28
EXHIBIT A
FORM OF
RIGHT CERTIFICATE
CERTIFICATE NO. R-___________ RIGHTS
NOT EXERCISABLE AFTER MARCH 3, 2007 OR EARLIER IF REDEEMED OR
EXCHANGED. THE RIGHTS ARE SUBJECT TO EARLIER EXPIRATION,
REDEMPTION AND EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
MAGNETEK, INC.
This certifies that ______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms and conditions of a Rights
Agreement (the "Rights Agreement") dated as of March 4, 1997 by and between
MagneTek, Inc., a Delaware corporation (the "Company"), and The Bank of New
York (the "Rights Agent"), to purchase from the Company at any time prior to
the earlier of the Redemption Date (as such term is defined in the Rights
Agreement) or 5:00 o'clock p.m., Nashville time, on March 3, 2007, at the
office or agency of the Rights Agent at ______________________, or at the
office of its successor as Rights Agent, one one-thousandth of a fully paid
and nonassessable share of Series A Junior Participating Cumulative Preferred
Stock, par value $1.00 per share, of the Company (a "Preferred Share") or, in
certain circumstances, other securities or other property, at a purchase
price of $60.00 (sixty dollars) per one one-thousandth of a Preferred Share
(the "Exercise Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase, including Certificate, on
the reverse side hereof completed and duly executed, with signature
guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise
Price as of March 4, 1997, based upon the Preferred Shares as constituted on
such date. As provided in the Rights Agreement, the Exercise Price and the
number of Preferred Shares or other securities or other property that may be
purchased upon the exercise of the Rights represented by this Right
Certificate are subject to modification and adjustment upon the occurrence of
certain events.
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders
of Right Certificates. This Right Certificate is subject to all the terms
and conditions of the Rights Agreement, which terms and conditions are hereby
incorporated herein by reference and made a part hereof. Copies of the
Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights
Agent, with the Form of Assignment, including Certificate, on the reverse
side hereof completed and duly executed, with signature guaranteed, may be
exchanged for another Right Certificate or Right Certificates of like tenor
and date representing Rights entitling the holder thereof to purchase a like
aggregate number of Preferred Shares or, in certain circumstances, other
securities or other property, as the Rights represented by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive, upon the surrender hereof with the Form
of Election to Purchase, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, another Right
Certificate or Right Certificates for the number of whole Rights not
exercised. Subject to the provisions of the Rights Agreement, the Rights
represented by this Right Certificate may be redeemed by the Company, at its
option, at a redemption price of $.001 per Right or, upon the occurrence of
certain events, the Company, at its option, may exchange such Rights for
fully paid and nonassessable shares of Common Stock, par value $.01 per
share, of the Company at an exchange ratio, per Right, of that number of
Common Shares (as defined in the Rights Agreement) which, as of the date of
the Board of Directors' action, has a Current Market Price (as defined in the
Rights Agreement) equal to the difference between the Exercise Price and the
Current Market Price of the Common Shares which each holder of a Right would
have a right to receive upon the exercise of a Right on such date.
No fractional securities shall be issued upon the exercise of any Right
or Rights represented hereby (other than fractions of Preferred Shares that
are integral multiples of one one-thousandth of a Preferred Share, that may,
at the option of the Company, be represented by depository receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, until the Right
or Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
2
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________________, ____.
Attest: MAGNETEK, INC.
By________________________ By__________________________
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK
By________________________
Name:
Title:
3
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer any or all of the Rights represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto___________________________________
______________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________________ (_____________) of the Rights
represented by this Right Certificate, together with all right, title and
interest in and to said Rights, and hereby irrevocably constitutes and
appoints __________________ attorney to transfer said Rights on the books of
MagneTek, Inc. with full power of substitution.
Dated: _________________, ____ ________________________
(Signature)
Signature Guaranteed:
4
CERTIFICATE
(TO BE COMPLETED, IF TRUE)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: _________________, ____ ________________________
(Signature)
Signature Guaranteed:
5
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
(CONTINUED)
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a member firm
of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Right Certificate to be Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any Right Certificate or
Right Certificates in exchange for this Right Certificate.
6
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
(CONTINUED)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
exercise any or all of the Rights represented by this Right Certificate)
To MagneTek, Inc.:
The undersigned hereby irrevocably elects to exercise
___________________________ (_____________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
/ / the Preferred Shares or other securities or property issuable upon the
exercise of said number of Rights pursuant to Section 7(c) of the
Rights Agreement.
/ / the shares of the Common Stock, par value $.01 per share, of the
Company, or other securities or property issuable upon the exercise of
said number of Rights pursuant to Section 11(a)(ii) of the Rights
Agreement.
/ / the securities issuable upon the exercise of said number of Rights
pursuant to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
______________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new
Right Certificate for the remaining balance of such Rights be issued in the
name of and delivered to:
______________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:________________, ____ ______________________________
(Signature)
Signature Guaranteed:
7
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
(CONTINUED)
CERTIFICATE
(TO BE COMPLETED, IF TRUE)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated:________________, ____ ______________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a member firm
of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Right Certificate to be Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any property or certificate
for securities upon the exercise of this Right Certificate or issue any new
Right Certificate for any remaining balance of unexercised Rights represented
by this Right Certificate.
8
