RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 19, 1997
BY AND BETWEEN
BUILDING MATERIALS HOLDING CORPORATION
AND
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
AS RIGHTS AGENT
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . 8
3 Issuance of Right Certificates. . . . . . . . . . . . . . . . . . 8
4 Form of Right Certificates. . . . . . . . . . . . . . . . . . . . 10
5 Countersignature and Registration . . . . . . . . . . . . . . . . 11
6 Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7 Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . . . 12
8 Cancellation and Destruction of Right Certificates. . . . . . . . 15
9 Reservation and Availability of Capital Stock . . . . . . . . . . 15
10 Securities Record Date. . . . . . . . . . . . . . . . . . . . . . 16
11 Adjustment of Exercise Price, Number of Shares Issuable Upon
Exercise of Rights or Number of Rights. . . . . . . . . . . . . . 16
12 Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights. . . . . . . . . . . . . . . . . 23
13 Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14 Fractional Rights and Fractional Shares . . . . . . . . . . . . . 27
15 Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . 28
16 Agreement of Right Holders. . . . . . . . . . . . . . . . . . . . 28
(i)
17 Right Holder and Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(ii)
TABLE OF CONTENTS
(continued)
18 Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . 29
19 Merger or Consolidation or Change of Name of Rights Agent . . . . 30
20 Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . 30
21 Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . 32
22 Issuance of New Right Certificates. . . . . . . . . . . . . . . . 33
23 Redemption of Rights. . . . . . . . . . . . . . . . . . . . . . . 34
24 Exchange of Rights. . . . . . . . . . . . . . . . . . . . . . . . 35
25 Certain Cash Tender Offers. . . . . . . . . . . . . . . . . . . . 36
26 Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . 39
27 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
28 Supplements and Amendments. . . . . . . . . . . . . . . . . . . . 40
29 Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . 41
30 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31 Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . 41
32 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
33 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 42
34 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
35 Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . 42
(iii)
TABLE OF EXHIBITS
Exhibit A -- Form of Certificate of Designation
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of the Rights
(iv)
TABLE OF DEFINED TERMS
TERM DEFINED PAGE SECTION
------------ ---- -------
Adjustment Shares 18 11(a)(ii)
Affiliate 2 1(a)
Agreement 1 Introduction
Associate 2 1(a)
Beneficially Own 2 1(b)
Beneficial Owner 2 1(b)
Business Day 3 1(c)
Cash Tender Offer Proposal 3 1(d)
Close of Business 3 1(e)
Closing Price 4 1(f)
Common Share 4 1(g)
Common Share Equivalent 18 11(a)(iii)
Company (Building Materials
Holding Corporation) 1 Introduction
Company (following a Section
13(a) Event) 25 13(a)(iii)
Current Market Price 4 1(h)
Distribution Date 8 3(a)
Exchange Act 5 1(j)
Exchange Ratio 35 24(a)
Exercise Price 13 7(c)
Expiration Date 5 1(l)
(v)
Fair Offer 37 25(b)
Fairness Opinion 36 25(a)
Independent Director 5 1(m)
(vi)
TABLE OF DEFINED TERMS
(CONTINUED)
TERM DEFINED PAGE SECTION
------------ ---- -------
NASDAQ 4 1(f)
Person 6 1(n)
Preferred Share 6 1(o)
Preferred Share Equivalent 18 11(b)
Proposal Date 37 25(a)
Prospective Offeror 3 1(d)
Record Date 1 Recital
Redemption Date 6 1(q)
Redemption Price 34 23(a)
Resolution 36 25(a)
Right 1 Recital
Rights Agent l Introduction
Section 11(a)(ii) Event 17 11(a)(ii)
Section 13(a) Event 24 13(a)
Securities Act 6 1(u)
Special Meeting 36 25(a)
Subsidiary 6 1(v)
Surviving Person 24 13(a)
Trading Day 6 1(w)
Unavailable Adjustment Shares 18 11(a)(iii)
Unavailable Exchange Shares 36 24(c)
Voting Share 6 1(x)
(vii)
15% Ownership Date 7 1(y)
15% Stockholder 7 1(z)
(viii)
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") is made and entered into as
of the 19 day of September, 1997 by and between Building Materials
Holding Corporation, a Delaware corporation (the "Company"), and American Stock
Transfer and Trust Company (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 October 2, 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
outstanding 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 below:
1
(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 with
regulatory requirements, the fulfillment of a condition, or otherwise)
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 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,
2
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 forty (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 State of New York are authorized
or obligated by law or executive order to close.
(d) "Cash Tender Offer Proposal" shall mean a written proposal
delivered to the Company by any Person (a "Prospective Offeror"), which
proposal:
(i) is for a tender offer for any and all of the outstanding
Voting Shares held by any Person other than such Prospective Offeror or its
Affiliates or Associates for cash at the same price;
(ii) states that such Prospective Offeror has obtained firm
written financing commitments from recognized institutional financing
sources, and/or has on hand cash or cash equivalents, for the full amount
of all financing necessary to consummate the acquisition of Voting Shares
described in such Cash Tender Offer Proposal and is accompanied by
reasonable evidence of the foregoing; and
(iii) contains the written agreement of the Prospective Offeror to
pay (or share with any other Prospective Offeror) the Company's costs of
any Special Meeting (as such term is defined in Section 25 hereof), other
than the Company's costs of preparing and mailing proxy material for its
own solicitation.
(e) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., New York time, on such date; provided, however, that if such date is not a
Business Day,
3
it shall mean 5:00 o'clock p.m., New York time, on the next succeeding Business
Day.
(f) "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 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 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.
(g) "Common Share" shall mean one share of the Common Stock, par
value $.001 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
common stock of such Person having the greatest voting power per share or, if
such Person is a Subsidiary of another Person, one Common Share of the Person
that ultimately controls such Person.
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such person is a member of the Board, who is not
a 15% Stockholder, or an Affiliate or Associate of a 15% Stockholder, or a
representative or nominee of a 15% Stockholder or of any such Affiliate or
Associate and was a member of the Board prior to the 15% Ownership Date, and
(ii) any successor of a Continuing Director, while such successor is a member of
the Board, who is not a 15% Stockholder, or an Affiliate or Associate of a 15%
Stockholder, or representative or nominee of a 15% Stockholder or of any such
Affiliate or Associate, and is
4
recommended or elected to succeed the Continuing Director by a majority of the
Continuing Directors.
(i) "Current Market Price" per share of any 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 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.
(j) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(m) "Expiration Date" shall mean September 22, 2007.
(n) "Independent Director" shall mean any director of the Company who
(i) became a director of the Company prior to the 15% Ownership Date or (ii)
became a director of the Company on or after the 15% Ownership Date, was
recommended to become a director of the Company by a majority of the Independent
Directors then in office and is not (A) a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder, (B) an officer, director or employee of
5
such 15% Stockholder, Affiliate or Associate, or (C) a relative or nominee of
any of the foregoing. For purposes of this subsection (n), a director shall be
deemed to be a "nominee" of a Person referred to in clause (ii) above if such
director was elected to the Board of Directors of the Company by a vote of
stockholders in which such director failed to receive the affirmative majority
of the votes cast by Persons other than such Person and such Person's Affiliates
and Associates. Whenever this Agreement requires or allows action to be taken
by a majority of the Independent Directors, with or without the concurrence of a
specified minimum number of Independent Directors, if necessary for such action
to be valid under applicable law, such action may be taken by the Board of
Directors or a duly authorized committee thereof, provided that the number of
Independent Directors who are members of the Board of Directors or of such
committee and who vote in favor of such action constitutes a majority of the
Independent Directors then in office and equals or exceeds any such specified
minimum number of Independent Directors.
(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 C Junior
Participating Cumulative Preferred Stock, par value $.001 per share, of the
Company, which shall have the rights and preferences set forth in the Company's
Restated Certificate of Incorporation in the form attached hereto as Exhibit A.
(q) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(r) "Redemption Date" shall mean the date of the action of a
majority, but not less than three, of the Independent Directors directing the
Company to redeem the Rights pursuant to Section 23(a) hereof or exchange the
Rights pursuant to Section 24(a) hereof.
(s) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(t) "Section 11(a)(ii) Event" shall have the meaning ascribed to it
in Section 11(a)(ii) hereof.
(u) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
6
(v) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(w) "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.
(x) "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.
(y) "Voting Share" shall mean (i) a Common Share 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.
(z) "15% Ownership Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) 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.
(aa) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, without the prior approval of a
majority of the Continuing Directors, hereafter acquires Beneficial Ownership
of, in the aggregate, in one or more transactions, a number of Voting Shares of
the Company equal to 1% or more of the Voting Shares then outstanding and
thereupon or thereafter Beneficially Owns 15% or more of the Voting Shares of
the Company then outstanding; provided, however, that the term "15% Stockholder"
shall not include: (i) the Company, any wholly owned Subsidiary of the Company,
any employee benefit plan of the Company or of a Subsidiary of the Company, or
any Person holding Voting Shares for or pursuant to the terms of any such
employee benefit plan; 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
7
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,in one or more
transactions, 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 (aa), 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. Any
determination made by the Independent Directors 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.
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 a majority, but not less than three, of the Independent
Directors) following the date of the commencement of, or the first public
announcement of the intent of any Person (other than the Company, any wholly
owned Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person holding Common Shares for or
pursuant to the terms of any such employee benefit plan) to commence, a tender
offer or exchange offer (other than a Fair Offer, as defined in Section 25
hereof), 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.
8
(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 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
B 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) As soon as practicable after the Record Date, the Company shall
send a copy of a Summary of the Rights in substantially the form attached hereto
as Exhibit C by first-class, postage-prepaid mail to each record holder of
Common Shares as of the Close of Business on the Record Date at the address of
such holder shown on the records of the Company.
(e) 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:
This certificate also represents Rights that entitle the holder
hereof to certain rights as set forth in the Rights Agreement
dated as of September 19, 1997 by and between the
Corporation and American Stock Transfer and Trust Company, 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
9
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.
(f) 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 the Rights Agreement dated as of September 19, 1997
by and between the Corporation and American Stock Transfer
and Trust Company, as Rights Agent.
(g) 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 1l(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 B hereto representing one Right for each
Common Share so issued.
(h) 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
10
Person are Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. Any determination made by a majority of the Independent Directors
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 B hereto, and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law 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 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 Vice Chairman of the Board, its President 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 manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company. 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.
11
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices 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.
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 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, 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
12
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 Sections 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, with signature guaranteed,
to the Rights Agent at the office of the Rights Agent at 00 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, 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-hundredth of a Preferred Share (or, following the
occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares
and/or other securities).
(c) The Exercise Price for the exercise of each Right shall initially
be $33.33 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 ll(a)(ii) Event or a
Section 13(a) Event, Common Shares and/or other securities) 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
13
thereafter have no right to exercise or exchange such Rights.
(e) Prior to the Distribution Date, if a majority, but not less than
three, of the Independent Directors 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 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 and/or securities), 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-hundredths
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
14
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
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF 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.
15
(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 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
16
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 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.
17
(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 upon each such event, 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-hundredths 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-hundredths 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.
(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 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
18
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
19
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.
(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 100.
(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.
20
(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-hundredths 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-hundredths of a Preferred Share (calculated to the nearest one-millionth of
a Preferred Share) obtained by multiplying (i) the number of one-hundredths 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 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-hundredths 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
21
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-hundredths 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-hundredth 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-hundredth 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-hundredths 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
22
after such record date of the number of one-hundredths 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-hundredths 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 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-hundredths 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
23
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 26 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 Section 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment.
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, (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"),
24
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-hundredths 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-hundredths 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-hundredths 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-hundredths 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
25
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.
(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
26
(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 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-hundredth 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-hundredth of
a Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth 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
27
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, on 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:
(a) prior to the Distribution Date, the Rights shall be represented
by certificates for Common Shares
28
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 office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate 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.
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 26 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 as compensation for
all services rendered by it hereunder reasonable and customary fees and
expenses. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including
29
the costs and expenses of defending against any claim of liability.
(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, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
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 paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. 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
30
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 imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (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 negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due 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
31
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 Vice Chairman, the President, 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.
(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 Person.
(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
32
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 and continued
employment thereof.
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 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. 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 State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having a principal office in New York,
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
33
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, 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, a majority, but not less than three, of the Independent Directors may, at
their option, direct the Company to redeem all, but not less than all, of the
then outstanding Rights at a redemption price of $.0067 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.
(b) Immediately upon the action of a majority, but not less than
three, of the Independent Directors directing the Company to redeem the Rights
pursuant to subsection (a) of this Section 23, or at such time and date
thereafter as they 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
34
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, a majority, but not less than three, of
the Independent Directors may, at their option, direct the Company to exchange
all, but not less than all, of the then outstanding Rights for Common Shares at
an exchange ratio of one Common Share per Right, as such exchange ratio shall be
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction involving Preferred Shares or Common Shares that occurs after the
date hereof (the "Exchange Ratio"), and the Company shall so exchange the
Rights.
(b) Immediately upon the action of a majority, but not less than
three, of the Independent Directors directing the Company to exchange the Rights
pursuant to subsection (a) of this Section 24, or at such time and date
thereafter as they 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 holder of a Right 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
35
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
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 that specifically set forth in Section 23 hereof or in
this Section 24, 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) Notwithstanding the foregoing, in the event that the aggregate
number of Common Shares that are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise or exchange of the Rights is less than the aggregate number
of Common Shares issuable upon the exchange of the Rights in accordance with
this Section 24 (the excess of such number of authorized Common Shares over and
above such number of issuable Common Shares being hereinafter referred to as the
"Unavailable Exchange Shares"), then the Company shall substitute for the pro
rata portion of the Unavailable Exchange Shares that would otherwise be issuable
upon the exchange of the Rights in accordance with this Section 24, (i) cash,
(ii) other equity securities of the Company (including, without limitation,
Common Share Equivalents), (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 Unavailable Exchange 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 24, such action shall apply uniformly to all outstanding Rights.
Section 25. CERTAIN CASH TENDER OFFERS.
(a) In the event that, at any time prior to the first date upon which
the Rights shall have become nonredeemable as provided in Section 23 hereof and
nonexchangeable as provided in Section 24 hereof, the Company shall receive a
Cash Tender Offer Proposal from any Prospective Offeror, a majority of the
Independent Directors of the Company shall, within 15 Business Days thereafter,
at their option, either (i) engage a nationally recognized investment banking
firm to render an opinion as to whether the price per Voting Share in cash to be
paid to the holders
36
of Voting Shares pursuant to such Cash Tender Offer Proposal is fair and
adequate (the "Fairness Opinion"), which Fairness Opinion shall be delivered to
the Board of Directors within 20 Business Days after such engagement, or (ii)
call a special meeting of stockholders (the "Special Meeting") for the purpose
of voting on a precatory resolution requesting the Board of Directors to accept
such Cash Tender Offer Proposal as such Cash Tender Offer Proposal may be
amended or revised by such Prospective Offeror from time to time to increase the
price per Voting Share in cash to be paid to the holders of Voting Shares (the
"Resolution"). The Special Meeting, if any, shall be held on a date selected by
a majority of the Independent Directors, which date shall be not less than 90
nor more than 120 days after the later of the date such Cash Tender Offer
Proposal is received by the Company (the "Proposal Date") or the date of any
previously scheduled meeting of stockholders to be held within 60 days after the
Proposal Date; provided, however, that if (x) such other meeting shall have been
called for the purpose of voting on a precatory resolution with respect to
another Cash Tender Offer Proposal and (y) the Proposal Date shall be not later
than 15 days after the date such other Cash Tender Offer Proposal was received
by the Company, then both the Resolution and such other resolution shall be
voted on at such meeting and such meeting shall be deemed to be the Special
Meeting. A majority of the Independent Directors shall set a date for
determining the stockholders of record entitled to notice of and to vote at the
Special Meeting, if any, in accordance with the Company's Certificate of
Incorporation and Bylaws and with applicable law. At the request of the
Prospective Offeror, the Company shall include in any proxy soliciting material
prepared by it in connection with the Special Meeting, if any, proxy soliciting
material submitted by the Prospective Offeror; provided, however, that the
Prospective Offeror shall by written agreement with the Company contained in or
delivered with such request have indemnified the Company against any and all
liabilities resulting from any misstatements, misleading statements and
omissions contained in the Prospective Offeror's proxy soliciting material and
shall have agreed to pay the Company's incremental costs incurred as a result of
including such material in the Company's proxy soliciting material.
(b) In the event that (x) the Fairness Opinion states that the price
per Voting Share to be paid in cash to the holders of Voting Shares pursuant to
the Cash Tender Offer Proposal is fair and adequate or (y) at the Special
Meeting the Resolution receives the affirmative vote of the majority of the
Voting Shares outstanding as of the record date of the Special Meeting and not
Beneficially Owned on
37
such day by the Prospective Offeror or any of its Affiliates or Associates,
then, subject to Section 25(c) below, proper provision shall be made in order
that upon the consummation of any tender offer (provided that such tender offer
is consummated prior to the 60th day following the date of such event, or prior
to such later day upon which a suspension of operation pursuant to Section 25(c)
below shall terminate) pursuant to which the Prospective Offeror offers to
purchase and purchases any and all of the Voting Shares held by Persons other
than the Prospective Offeror and its Affiliates and Associates at a price per
Voting Share in cash equal to or greater than the price per Voting Share
provided in the Cash Tender Offer Proposal (a "Fair Offer"), (i) each previously
unexercised Right that has not become nonredeemable as provided in Section 23
hereof shall be redeemed in accordance with Section 23 hereof, effective
immediately prior to the consummation of such tender offer, (ii) the acquisition
of Common Shares pursuant to such tender offer shall not be taken into account
in determining whether the 15% Ownership Date has or has not occurred, and (iii)
neither the commencement of, nor the first public announcement of the intent of
such Person to commence, such tender offer shall be taken into account in
determining whether the Distribution Date has or has not occurred. The
redemption of Rights pursuant to this Section 25 shall not in any way affect the
exercisability of such Rights prior to the effective time of such redemption.
(c) Notwithstanding Section 25(b) above, in the event that a majority
of the Independent Directors determine that such action is in the best interests
of the stockholders of the Company, they may, at any time prior to the
consummation of the tender offer referred to in the first sentence of Section
25(b) above, suspend the operation of clauses (i) and (ii) in such sentence for
a period of time not to exceed 120 days, such suspension to be effective upon
the date of the first public announcement thereof.
(d) Nothing contained in this Section 25 shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any Cash Tender Offer Proposal, or to recommend that
holders of Voting Shares reject any Cash Tender Offer Proposal, or to take any
other action (including, without limitation, the commencement, prosecution,
defense or settlement of any litigation or the submission of additional or
alternative Cash Tender Offer Proposals or other proposals to the Special
Meeting) with respect to any Cash Tender Offer Proposal or any tender offer that
the Board of Directors
38
believes is necessary or appropriate in the exercise of such fiduciary duty.
(e) Nothing is this Section 25 shall be construed as limiting or
prohibiting the Company or any Prospective Offeror from proposing or engaging in
any acquisition, disposition or other transfer of any securities of the Company,
any merger or consolidation involving the Company, any sale or other transfer of
assets of the Company, any liquidation, dissolution or winding up of the
Company, any other business combination or other transaction, or any other
action; provided, however, that the holders of Rights shall have the rights set
forth in this Agreement with respect to any such acquisition, disposition,
transfer, merger, consolidation, sale, liquidation, dissolution, winding up,
business combination, transaction or action.
Section 26. 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, in accordance with Section 27 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
39
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 26 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) As soon as practicable after the occurrence of each Section
11(a)(ii) Event and each Section 13(a) Event, the Company shall give to each
holder of a Right Certificate, in accordance with Section 27 hereof, a notice of
the occurrence of such event, specifying the event and the consequences of the
event to holders of Rights under Section 11 or 13 hereof.
Section 27. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Building Materials Holding Corporation
San Francisco
Attention: Xxxx X. Street,
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 office of the Rights
Agent as follows:
American Stock Transfer and Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: 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 28. SUPPLEMENTS AND AMENDMENTS.
40
(a) A majority, but not less than three, of the Independent Directors
may, from time to time, without the approval of any holders of Rights, direct
the Company and the Rights Agent to 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 the Company 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.
(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 provisions of its Certificate of Incorporation
relating to 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.
Section 29. CERTAIN COVENANTS. Subject to Section 28 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 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 of
the Company, 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 30. 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.
41
Section 31. 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 32. 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 33. 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.
Section 34. 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 35. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Attest: BUILDING MATERIALS HOLDING
CORPORATION
By By
----------------------- ----------------------------
Name: Xxxx X. Street Name: Xxxxxx X. Xxxxxx
Title: Secretary Title: President
42
Attest: AMERICAN STOCK TRANSFER AND
TRUST COMPANY
By By
----------------------- ------------------------
Name: Name:
----------------- ------------------
Title: [Secretary or Title: [President or
Assistant Secretary] Vice President]
43
