RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 31, 1996 (the
"Agreement"), between SOUTHERN ELECTRONICS CORPORATION, a
Delaware corporation (the "Company"), and NATIONAL CITY BANK, a
national banking association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on October 31, 1996 ("the Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for
each share of Common Stock, (as hereinafter defined) of the
Company outstanding at the Close of Business on November 12,
1996 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(m) hereof) for each share of Common
Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and
the Distribution Date (as hereinafter defined), each right
initially representing the right to purchase eight shares of
Common Stock of the Company upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
shall, after the Rights Dividend Declaration Date, become the
Beneficial Owner of 12% or more of the shares of Common Stock
then outstanding, but shall not include the Company, any
Subsidiary of the Company, or any Person who or which, together
with all Affiliates and Associates of such Person, is the
Beneficial Owner of 12% or more of the shares of Common Stock of
the Company as of the Record Date, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan; provided, however, any
Person who or which, together with all Affiliates and Associates
of such Person, is the Beneficial Owner of 12% or more of the
shares of Common Stock as of the Record date and who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of an additional 5% or more
of the shares of Common Stock then outstanding shall be deemed an
Acquiring Person. Notwithstanding the foregoing, no Person shall
become an Acquiring Person as the result of an acquisition of
shares of Common Stock by the Company or a recapitalization
which, by reducing the number of shares of Common Stock
outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 12% or more of the shares of
Common Stock of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 12% or
more of the shares of Common Stock of the Company by reason of
share purchases or a recapitalization by the Company and shall,
after such share purchases or recapitalization by the Company,
become the Beneficial Owner of an additional number of shares of
Common Stock of the Company equal to or in excess of 1% of the
then outstanding number of shares of Common Stock of the Company,
then such Person shall be deemed to be an Acquiring Person; and
further provided, that if a Person who or which was the
Beneficial
Owner of 12% or more of the shares of Common Stock of the Company
as of the Record Date becomes the Beneficial Owner of an
additional 5% or more of the shares of Common Stock of the
Company by reason of such share purchases or recapitalization
by the Company that Person shall, after such share repurchases or
recapitalization by the Company, become the Beneficial Owner of
an additional number of shares of Common Stock of the Company
equal to or in excess of 1% of the then outstanding number of
shares of Common Stock of the Company, then such Person shall be
deemed to be an Acquiring Person.
(b) "Act" shall mean the Securities Act of 1933.
(c) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect on the
date of this Agreement (the "Exchange Act").
(d) "Associate" shall mean:
(i) any corporation or organization, or parent or
subsidiary of such corporation or organization, of which a
Person is an officer, director or partner or is, directly or
indirectly, the Beneficial Owner of 10 percent or more of
any class of equity securities,
(ii) any trust or other estate in which a Person has a
beneficial interest of 10 percent or more or as to which
such Person serves as trustee or in a similar fiduciary
capacity, and
(iii) any brother or sister (whether by whole or half
blood), ancestor, lineal descendant or spouse of a Person,
or any such relative of such spouse.
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "Beneficially Own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own:"
(A) securities acquired by participation in good
faith in a firm commitment underwriting by a Person
engaged in business as an underwriter of securities
until the expiration of forty days after the date of
such acquisition, or
(B) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or
(C) securities issuable upon exercise of Rights at
any time prior to the time a Person becomes an
Acquiring Person (as defined in this section), or
(D) securities issuable upon exercise of Rights
from and after the time a Person becomes an Acquiring
Person which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to
the Distribution Date (as hereinafter defined in
Section 3(a)) or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section
11(f) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "Beneficial Ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under
the Exchange Act, and
(B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (f), or disposing of any
voting securities of the Company.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in
the State of Georgia are authorized or obligated by law or
executive order to close.
(g) "Close of Business" on any given date shall mean
5:00 p.m., Atlanta time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00
p.m., Atlanta time, on the next succeeding Business Day.
(h) "Common Stock" shall mean the common stock, par
value $.01 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other
equity interest having power to control or direct the
management, of such Person.
(i) "Common Stock Equivalents" shall have the meaning
set forth in Section 11(b)(ii)(C) hereof.
(j) "Current Market Price" per share of Common Stock
on any date shall mean the average of the daily closing
prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a) hereof, the
Current Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a
period following the announcement by the issuer of such
Common Stock of:
(i) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other
than the Rights), or
(ii) any subdivision, combination or
reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Days or
ten (10) Trading Day period, as set forth above, after
the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or
reclassification,
then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") or such other
system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board
of Directors of the Company shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If
the Common Stock is not publicly held or not so listed or traded,
Current Market Price per share shall mean the fair value per
share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for
all purposes.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Exchange Act" shall have the meaning set forth in
Section 1(c) hereof.
(m) "Exempt Person" shall mean the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
(n) "Expiration Date" shall mean the earlier of the time at
which the Rights are redeemed as provided in Section 23 hereof or
the "Final Expiration Date" (as hereinafter defined in this
section).
(o) "Final Expiration Date" shall mean the Close of Business
on October 31, 2006.
(p) "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, or
other entity.
(q) "Preferred Stock" shall mean the presently authorized but
unissued preferred shares of the Company, having the rights and
preferences to be determined by the Board of Directors, as set
forth in Article Fourth of the Articles of Incorporation of the
Company.
(r) "Principal Party" shall mean
(i) in the case of any transaction described in clauses
(i) or (ii), of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such
merger, consolidation, or share
exchange and if no securities are so issued, the Person that
is the other party to such merger, consolidation, or share
exchange, or, if there is more than one such Person, the
Person the shares of Common Stock of which have the greatest
aggregate market value of shares outstanding, or if the
Person that is the other party to the merger does not
survive the merger, the Person that does survive the merger
(including the Company if it survives) or the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions, or if each Person that
is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of
such persons that is the issuer of Common Stock having the
greatest aggregate market value of shares outstanding;
provided, however, that in any such case,
(A) if the Common Stock of such Person is not at
such time and has not been continuously over the
preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and
(B) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever
of such Persons is the issuer of the Common Stock
having the greatest aggregate market value of shares
outstanding; and
(C) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in clauses (A) and
(B) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the
joint venture was a subsidiary of both or all of such
joint venturers, and the Principal Party in each
case shall bear the obligation set forth in Section 13
in the same ratio as its interest in such Person bears
to the total of such interests.
(s) "Purchase Price" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(t) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(u) "Rights Certificates" shall have the meaning set forth
in Section 3(a) hereof.
(v) "Section 11(a)(ii) Event" shall be deemed to have
occurred upon any Person becoming an Acquiring Person.
(w) "Section 13 Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 13(a) hereof,
(x) "Spread" shall have the meaning set forth in Section
11(b)(i)(B) hereof.
(y) "Stock Acquisition Date" shall mean the earlier of the
first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such.
(z) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities
sufficient to elect at least a majority of the directors of such
corporation is Beneficially Owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(aa) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(bb) "Substitution Period" shall have the meaning set forth
in Section 11(b) hereof.
(cc) "Trading Day" shall have the meaning set forth in
Section 1(j) hereof.
(dd) "Triggering Event" shall mean any Section 11(a)(ii)
Event, or any Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) 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. Issue of Rights Certificates.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the
Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date), or
(ii) the Close of Business on the tenth Business Day
after the date that a tender or exchange offer by any Person
(other than an Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial
Owner of 12% or more of the shares of Common Stock then
outstanding (the earliest of (i) and (ii) being herein
referred to as the "Distribution Date),"
(A) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the
names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate
certificates, and
(B) the Rights will be transferable only in
connection with the transfer of the underlying shares
of Common Stock (including a transfer to the Company).
As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the
"Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(f) hereof,
at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.
As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit B (the "Summary
of Rights"), by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the
Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall
also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 1(o) hereof), the transfer of any
certificates representing shares of Common Stock in respect
of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common
Stock.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued after the Record Date but prior to
the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares of Common Stock shall also
be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between SOUTHERN ELECTRONICS CORPORATION (the
"Company") and NATIONAL CITY BANK (the "Rights Agent") dated
as of October 31, 1996 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person, or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of:
(i) the Distribution Date or
(ii) the Expiration Date,
the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
of Nasdaq or other system then in use, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever distributed, shall be dated as
of the Record Date and on their face shall entitle the holders
thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price determined in accordance
with Section 11(a)(ii) hereof (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights Beneficially Owned by
any Person known to be:
(i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either:
(A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring
Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend, modified as applicable to such Person:
The Rights represented by this Rights Certificate are or
were Beneficially Owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any
Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights 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 Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by
the Company with the same force
and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company;
and any Rights Certificates may be signed on behalf of the
Company by any Person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such Person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration
and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section
7(e) and Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close
of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of
shares of Common Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall
make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the Certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination
or exchange of Rights 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 Rights Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and
deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(b) and Section 23(a) hereof) in whole or
in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number
of shares (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable,
at or prior to the Expiration Date.
(b) The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall be determined in the
manner provided in Section 11(a)(ii) and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price per share of
Common Stock (or other shares, securities, cash or other assets,
as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(j) hereof, thereupon promptly
(i) (A) requisition from any transfer agent
of the shares of Common Stock (or make
available, if the Rights Agent is the
transfer agent for such shares) certificates
for the total number of shares of Common
Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to
comply with all such requests, or
(B) if the Company shall have elected to
deposit the total number of shares of Common
Stock issuable upon exercise of the Rights
hereunder with a depositary agent,
requisition from the depositary agent
depositary receipts representing such number
of shares of Common Stock as are to be
purchased (in which case certificates for the
shares of Common Stock represented by such
receipts shall be deposited by the transfer
agent with the depositary agent) and the
Company will direct the depositary agent to
comply with such request,
(ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14 hereof,
(iii) requisition from the Company the amount of
other securities, cash or assets to be paid in lieu of
shares of Common Stock pursuant to an adjustment
required under Section 11(b) hereof,
(iv) after receipt of such certificates,
depositary receipts, other securities, cash or assets,
cause the same to be delivered to, or upon the order
of,
the registered holder of such Rights Certificate,
registered in such name or names as may be designated
by such holder, and
(v) after receipt thereof, deliver such cash, if
any, to, or upon the order of, the registered holder of
such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(b) hereof) shall be made in cash or by
certified bank check, bank draft or money order payable to the
order of the Company. In the event that the Company is obligated
to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(b) hereof, the
Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 6
and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering
Event, any Rights Beneficially Owned by:
(i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either:
(A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or
(B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e),
shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect
to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in
the form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such
exercise, and
(ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates.
All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in
such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued
shares of Common Stock (and, following the occurrence of a
Triggering Event, out of its other securities or out of its
authorized and issued shares held in its treasury), the number of
shares of Common Stock (and, following the occurrence of a
Triggering Event, other securities) that, as provided in this
Agreement including Section 11(b) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Common Stock (and, following
the occurrence of a Triggering Event, other securities) issuable
and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or Nasdaq or other
system then in use, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable,
all securities reserved for such issuance to be listed on such
exchange or Nasdaq or other system then in use upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earliest
date after the first occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in
accordance with Section 11(b) hereof, or as soon as is
required by law following the Distribution Date, as the case
may be, a registration statement under the Act, with respect
to the securities purchasable upon exercise of the
Rights on an appropriate form,
(ii) cause such registration statement to become
effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of:
(A) the date as of which the Rights are no longer
exercisable for such securities, and
(B) the date of the expiration of the Rights.
The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such
time as the suspension is no longer in effect. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and
until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
Common Stock (and, following the occurrence of a Triggering
Event, other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (or
other securities) (subject to payment of the Purchase Price), be
duly and validly authorized and issued.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any
certificates for a number of shares of Common Stock
(or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of shares of Common Stock (or
other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of shares of Common Stock (or any
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Common Stock Record Date.
Each Person in whose name any certificate for a number of
shares of Common Stock (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of
Common Stock (or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the
Common Stock (or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Stock (or other
securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not
be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.
The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event that, at any time after the Close of
Business on the Distribution Date and prior to the Close of
Business on the Expiration Date, the Company shall:
(A) declare or pay a dividend on the Common Stock
payable in shares of Common Stock,
(B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
(D) issue any shares of its capital stock in a
reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof,
then and in such event, the number of shares of Common
Stock, the number and kind of shares of Preferred Stock,
other
securities or property, as the case may be, issuable upon
the exercise of a Right on such date 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 of shares of Common
Stock, the number and kind of shares of Preferred Stock,
other securities or 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 which
would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event that any Person (other than the
Company, any Subsidiary of the Company, any Person who or
which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of 12% or more of the shares
of Common Stock of the Company as of the Rights Dividend
Declaration Date, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at any
time after the Rights Dividend Declaration Date, become an
Acquiring Person, then, promptly following the occurrence of
each such Section 11(a)(ii) event, proper provision shall be
made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the
right to receive, upon exercise thereof, a number of shares
of Common Stock equal to eight shares of Common Stock
multiplied by a fraction, the numerator of which is the
number of shares of Common Stock outstanding on the Stock
Acquisition Date, and the denominator of which is the number
of Rights outstanding on the Stock Acquisition Date that are
not Beneficially Owned by the Acquiring Person or its
Affiliates or Associates. The price (which following such
first occurrence, shall thereafter be referred to as the
"Purchase Price") for the exercise of each Right shall be
equal to the product of (x) 20% of the then Current Market
Price per share of the Common Stock (determined pursuant to
Section 1(j) on the Stock Acquisition Date), multiplied by
(y) the number of shares of Common Stock to be received upon
exercise, as set out in this subparagraph.
(b) In the event that the number of shares of Common
Stock which are authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall:
(i) determine the excess of
(A) the Current Market Price of the Shares of
Common Stock issuable upon the exercise of a Right over
(B) the Purchase Price (such excess, the
"Spread"), and
(ii) with respect to each Right (other than Rights
which have become void pursuant to Section 7(e) hereof),
make adequate provision to substitute for the Shares, upon
payment of the applicable Purchase Price,
(A) cash,
(B) a reduction in the Purchase Price,
(C) Preferred Stock or other equity securities of
the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have
substantially the same value as shares of Common Stock
(such shares of preferred stock to be referred to as
"Common Stock Equivalents")),
(D) debt securities of the Company,
(E) other assets, or
(F) any combination of the foregoing,
having an aggregate value, when added to the value of the
shares of Common Stock actually issued upon exercise of such
right, equal to the Current Market Price (less the amount of
any reduction in the Purchase Price), where such aggregate
value has been determined by the Board of Directors of the
Company based upon the advice of a recognized investment
banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause
(ii) above within thirty (30) days following the Section
11(a)(ii) Event, then the Company shall be obligated to
deliver, to the extent permitted by applicable law and any
material agreements in effect to which the Company is a
party, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the
Company shall determine that it is likely that sufficient
additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Event, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(b)(ii), the
Company (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(b)(ii), the value
of the shares of Common Stock shall be the Current Market
Price (as determined pursuant to Section 1(j) hereof) per
share of the Common Stock on the date of the Section
11(a)(ii) Event and the value per share or fractional value
of any Common Stock Equivalent shall be deemed to have the
same value as the Common Stock on such date. The Board of
Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive shares
of Common Stock upon the exercise of the Rights among the
holders of the Rights pursuant to this Section 11(b)(ii).
(c) Anything herein to the contrary notwithstanding, no
adjustment in the number of shares of Common Stock purchasable
upon exercise of a Right pursuant to Section 11(a)(ii) hereof
or in the Purchase Price or Spread pursuant to Section 11(b)
hereof shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
aggregate number of shares or in the Spread or Purchase Price;
provided, however, that any adjustments which
by reason of this Section 11(c) are not required to be made shall
be carried forward and taken into account in any subsequent
adjustments. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one-hundredth of a
share of Common Stock. Notwithstanding the first sentence of
this Section 11(c), any adjustment required by this Section 11
shall be made no later than the earlier of
(i) three (3) years from the date of the transaction
which mandates such adjustment or
(ii) the Expiration Date.
(d) If as a result of an adjustment made pursuant to
Section 11(b) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and
the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in Sections 11(a), (b), (c), (e), (f), (I) and (j), and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Common Stock shall apply on like terms to any such
other shares.
(e) All Rights originally issued by the Company
subsequent to any adjustment made to the number of shares of
Common Stock purchasable upon exercise of a Right pursuant to
Section 11(a)(ii) hereof shall evidence the right to purchase the
number of shares of Common Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(f) The Company may elect on or after the date of any
adjustment of the number of shares of Common Stock purchasable
upon exercise of a Right pursuant to Section 11(a)(ii) hereof to
adjust the number of Rights, in lieu of any adjustment in the
number of shares of Common Stock purchasable upon the exercise of
a Right. The aggregate of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the
number of shares of Common Stock for which the aggregate of the
Rights was exercisable immediately prior to such adjustment.
Adjustments in Rights shall be calculated to the nearest
one-hundredth of a Right. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made. This record
date may be the date on which the number of shares of Common
Stock purchasable upon exercise is adjusted or any day
thereafter, but if the Rights Certificates have been issued the
record date shall be at least ten (10) days later than the date
of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(f), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights 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
number of shares of Common Stock purchasable upon exercise
of a Right) and shall be registered in the names of the holders
of record of Rights Certificates on the record date specified in
the public announcement.
(g) Irrespective of any adjustment or change in the
number of shares of Common Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the number of shares which were
expressed in the initial Rights Certificates issued hereunder.
(h) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of
the Common Stock or other shares of Common Stock Equivalents
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock or Common
Stock Equivalents at such adjusted Purchase Price. In the event
that it appears that the issuance of shares of Common Stock at
the Purchase Price called for herein would result in issuance of
shares of Common Stock that were not validly issued fully paid
and nonassessable shares of Common Stock, the Company may issue
Common Stock Equivalents in the manner provided in Section
11(b)(ii)(C) hereof.
(i) In any case in which this Section 11 shall require
that an adjustment in the number of shares of Common Stock or
other capital stock or securities of the Company, if any,
issuable upon exercise of the Rights shall be made effective as
of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and
above the number of shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise on the basis of the number of shares of Common Stock
purchasable upon exercise of a Right in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional
or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(j) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
adjustments in the Purchase Price or number of shares of Common
Stock purchasable upon exercise of a Right, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in their judgment the Board of Directors of the
Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any shares of Common
Stock at less than the Current Market Price,
(iii) issuance wholly for cash of shares of preferred
stock or other securities which by their terms are
convertible into or exchangeable for shares of Common Stock,
(iv) stock dividends or
(v) issuance of rights, options or warrants referred
to in this Section 11,
hereafter made by the Company to holders of its Common Stock
shall not be taxable to such stockholders.
(k) The Company covenants and agrees that it shall not, at
any time after the Distribution Date,
(i) consolidate with any other Person,
(ii) merge with or into any other Person,
(iii) engage in a share exchange with any other Person,
(iv) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or
Persons, if
(A) at the time of or immediately after such
consolidation, merger, share exchange, sale or
transfer, there are any rights, warrants or other
instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the
Rights or
(B) prior to, simultaneously with or immediately
after such consolidation, merger, share exchange, sale
or transfer, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party"
for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(l) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action if at any time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(m) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date
(i) declare or pay any dividend on the outstanding
shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock,
or
(iii) combine the outstanding shares of Common Stock
into a smaller number of shares,
then in any such case the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall remain
unchanged, so that the value of the rights remaining shall
represent the same proportion of the value of the Company as
before. Rights associated with shares eliminated by any
combination of outstanding shares of Common Stock shall be
cancelled by operation of such combination.
Section 12. Certificate of Adjusted Number of Shares.
Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent, and with each transfer
agent for the Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger, Share Exchange or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly,
(i) the Company shall consolidate with, or merge with
and into, any other Person and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger,
(ii) any Person shall consolidate with, or merge with
or into, the Company, or engage in a share exchange with the
Company, and the Company shall be the continuing or
surviving corporation of such consolidation, merger or share
exchange and, in connection with such consolidation, merger
or share exchange, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or
other securities of any other Person (or of the Company) or
cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons,
then, and in each such case, promptly following the occurrence of
each such Section 13 Event, proper provision shall be made so
that:
(iv) each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current
Purchase Price, based on the Current Market Price of the
Common Stock of the Company as of the last Business Day
prior to the first public announcement of such Section 13
Event, in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is defined in Section
1(r)), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to
the product of eight times the result obtained by dividing
the Current Market Price of a share of Common Stock by the
Current Market Price of a share of Common Stock of the
Principal Party multiplied by a fraction the numerator of
which is the number of shares of Common Stock outstanding on
the Stock Acquisition Date, and the denominator of which is
the number of Rights outstanding on the Stock Acquisition
Date that are not Beneficially Owned by the Acquiring Person
or its Affiliates or Associates, provided, however, that the
Purchase price and the number of shares of Common Stock of
such Principal Party issuable upon the exercise of each
Right shall be further adjusted as provided in Section 11(d)
of this Agreement to reflect any events occurring in respect
of such Principal Party after the date of such Section 13
Event;
(v) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to
this Agreement;
(vi) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first
occurrence of a Section 13 Event;
(vii) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to
its shares of Common Stock thereafter deliverable upon the
exercise of the Rights, provided that, upon the subsequent
occurrence of any merger, consolidation, share exchange,
sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder
of a Right shall thereupon be entitled to receive, upon
Exercise of a Right and payment of the Purchase Price as
provided in this Section 13(a), such cash, shares, rights,
dividends, warrants and other property which such holder
would have been entitled to receive had such holder, at the
time of such transaction, owned the Common Stock of the
Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a); and
(viii) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any
Section 13 Event, except as they apply to determination of
the Purchase Price.
(b) The Company shall not consummate any such
consolidation, merger, share exchange, sale or transfer unless
prior thereto the Company and the Principal Party shall have
exercised and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) hereof
shall promptly be performed in accordance with their terms, that
the Principal Party has a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraph (a) of this Section 13
and further providing that, as soon as practicable after the date
of any consolidation, merger, share exchange or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal
Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such
registration statement to
(A) become effective as soon as practicable after
such filing and
(B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may
be necessary or appropriate;
(iii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on
any national securities exchange or Nasdaq, to list or admit
to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on such
securities exchange or Nasdaq, of, if the Common Stock of
the Principal Party shall not be listed or admitted to
trading on any such national securities exchange or Nasdaq,
to cause the Rights and the securities receivable upon
exercise of the Rights to be reported by such other system
then in use;
(iv) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act; and
(v) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the
Principal Party subject to purchase upon exercise of
outstanding Rights.
(c) The provisions of this Section 13 shall similarly apply
to successive mergers, consolidations, share exchanges or sales
or other transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section
13(a).
(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate or articles of
incorporation or bylaws or other instrument governing its
corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue (other than
to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then
Current Market Price per share thereof (determined pursuant
to Section 1(j) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at
less than such then Current Market Price, or
(ii) providing for any special payment, tax or similar
provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of
Section 13,
then, in such event, the Company hereby agrees with each holder
of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or
as a consequence of, the consummation of the proposed
transaction.
(e) The Company covenants and agrees that it shall not, at
any time after a Person first becomes an Acquiring Person, enter
into any transaction of the type contemplated by (i) - (iii) of
Section 13(a) hereof if (x) at the time of or immediately after
such consolidation, merger, share exchange, sale, transfer or
other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (y) prior to,
simultaneously with or immediately after such consolidation,
merger, share exchange, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute,
the Principal Party for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates or (z) the form or
nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If
on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one share of Common Stock. For purposes of this
Section 14(b), the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as
determined pursuant to Section 1(j) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, other
than rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), in his own behalf and for his own benefit, may enforce,
and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights
Certificate (or, prior to the Distribution Date, such Common
Stock) in the manner provided in such Rights Certificate and in
this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall
be entitled to specific performance of the obligations hereunder
and injunctive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent
if surrendered at the office or agency of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to Section 7(e) hereof,
shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder.
No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of shares of Common Stock or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Rights or Rights
evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay in a timely manner to the
Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and disbursements
and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any losses,
expenses, claims, damages or liabilities, 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 and performance hereunder, including, without
limitation, the costs and expenses of defending against any claim
of liability arising therefrom, directly or indirectly, and will
promptly reimburse the Rights Agent for any legal or other
expenses reasonably incurred in investigating or defending any
such loss, expense, claim, damage or liability.
(b) The Rights Agent shall be protected by the indemnity
provided by this Section 18 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 Rights Certificate or certificate for
Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons or
otherwise upon the advice of counsel as set forth in Section 20
of this Agreement.
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, however, that such corporation would be
eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights 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 Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the
identity of any Acquiring Person and the determination of
Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the
Chairman of the Board, the President, the Chief Executive
Officer, any Vice President, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for a loss which is a result of
or caused by its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals maintained in this
Agreement or in the Rights Certificates or be required to verify
the same (except as to its countersignature on such Rights
Certificates), 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 or legality of this Agreement or the
execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or legality or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or Section
13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after
receipt of the certificate described in Section 12 hereof setting
forth any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Rights Certificate or as
to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid and non-assessable.
(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 Person reasonably believed by the Rights Agent
to be one of the Chairman of the Board, the President, any vice
President, the Secretary, any Assistant Secretary, the Treasurer,
any Assistant Treasurer or Controller of the Company, and to
apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable to the
Company or the holder of any Rights Certificate or any
stockholder of the Company for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights
Agent set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date
on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable in
accordance with a proposal included in such application on or
after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of
the
Company actually receives such application, unless any such
officer shall
have consented in writing to an earlier date) unless, prior to
taking any
such action (or the effective date in case of an omission), the
Rights
Agent shall have received written instructions in response to
such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not the
Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued
employment thereof.
(j) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed to
certify or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock, by registered or
certified mail, and, following the Distribution Date, to the
holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights agent, as the case may be, and to each
transfer agent of the Common Stock, by registered or certified
mail, and, following the Distribution Date, to the holders
of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any state, in
good standing, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a
corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and, following
the Distribution Date, mail a notice thereof in writing to the
registered holders of the Rights 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 Rights Certificates.
Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price or the number or kind
or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the earlier of the redemption or
expiration of the Rights, the Company:
(a) may, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, or upon
a contractual obligation of the Company in each case existing
prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that
(i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of
material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and
to the extent that, appropriate adjustments shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the time any Person first becomes
an Acquiring Person, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right (the
"Redemption Price"), as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to
Paragraph (a) of this Section 23 (or at such later time as the
Board of Directors may establish for the effectiveness of such
redemption), evidence of which shall have been filed with the
Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The failure to
give, or any defect in, any such notice shall not affect the
validity of such redemption.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time after any person first becomes an Acquiring
Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Not withstanding the
foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after (i) any Person (other than
an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then
outstanding or (ii) the occurrence of an event specified in
Section 13(a) hereof.
(b) Immediately upon the action of the Board of Directors
of this Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further notice,
the right to exercise such Rights shall terminate and the only
right thereafter a holder of such Rights shall have shall be to
receive
that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to all
of the holders of the Rights so exchanged at their last addresses
as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, or that any regulatory actions
or approvals are necessary in connection therewith, the Company
may, in its discretion, take such actions or seek such approvals
as may be necessary to authorize additional shares of Common
stock for issuance upon exchange of the Rights. In the event
that the Company shall, after good faith effort, be unable to
take such actions or obtain such approvals as may be necessary to
authorize such additional shares of Common Stock, the Company
shall substitute, to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon
exchange of a Right, a number of units of Common Stock
Equivalents as defined in Section 11(b)(ii) hereof, cash or other
assets of the Company equal to the Current Market Price of one
share of Common Stock (determined pursuant to Section 1(j)
hereof) as of the date of issuance of such Common Stock
Equivalents or fractions thereof.
(d) The Company shall not, in connection with any exchange
pursuant to this Section 24, be required to issue fractions of
shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the
registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the
purposes of this paragraph (d), the current market value of a
whole share of Common Stock shall be the closing price
of a share of Common Stock (as determined pursuant to the second
sentence of Section 1(j) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Distribution Date,
(i) to pay any dividend payable in stock of any class
to the holders of the Common Stock or
(ii) to offer to the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or
any other securities, rights or options, or
(iii) to effect any reclassification of its Common
Stock (other than a reclassification involving only the
subdivision of outstanding shares of Common Stock), or
(iv) to effect any liquidation, dissolution or winding
up of the Company,
then, in each such case, the Company shall give to each holder of
a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, reclassification or
the date on which such liquidation, dissolution or winding up is
to take place and the date of participation therein by the
holders of the shares of Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the
shares of Common Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of
Common Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) or Section 13 hereof shall occur, then, in any such
case, the Company shall, as soon as practicable thereafter, give
to each holder of a Rights Certificate (or if occurring prior to
the Distribution Date, the holders of the Common Stock),
to the extent feasible and in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights
under Sections 11(a)(ii) and 13 hereof.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights
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:
Southern Electronics Corporation
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attention: Corporate 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 Rights 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) as follows:
National City Bank
Corporate Trust Administration
Xxxxx 000
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company, in the case
of Rights represented by certificates for Common Stock, and on
the registry books of the Rights Agent, in the case of Rights
represented by Rights Certificates.
Section 27. Supplements and Amendments.
Subject to the penultimate sentence of this Section 27, for
so long as the Rights are then redeemable, the Company may in its
sole and absolute discretion, and the Rights Agent shall if the
Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of the holders of
the Rights. At any time when the Rights are no longer
redeemable, and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of Rights
Certificates in order
(c) to cure any ambiguity,
(d) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions
herein,
(e) to shorten or lengthen any time period hereunder, or
(f) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person, or an
Affiliate or Associate of any such Acquiring Person);
provided, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (e) of this sentence,
(g) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or
(h) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of the Rights.
Upon the delivery of a certificate that is signed by an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement
to the contrary, no supplement or amendment shall be made which
changes the Redemption Price.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc.
For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of
Directors of the Company (or, where specifically provided for
herein, certain specified members thereof) shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board
or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation,
the right and power to
(a) interpret the provisions of this Agreement, and
(b) make all determinations deemed necessary or advisable
for the administration of this Agreement (including, but not
limited to, a determination to redeem or not redeem the Rights or
to amend the Agreement).
All such actions, calculations, interpretations and
determinations (including, for purposes of clause (c) below, all
omissions with respect to the foregoing) which are done or made
by the Board (or, where specifically provided for herein, by
certain specified members thereof) in good faith, shall
(c) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties,
and
(d) not subject the Board or such specified members
thereof to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any
legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held
by such court or authority to be invalid, void or unenforceable
and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of
Business of the twentieth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the
laws of the State of Georgia and for all purposes shall be
governed by and construed in accordance with the laws of such
State applicable to contracts to be made and to be performed
entirely within such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, The parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the date
and year first above written.
Attest: SOUTHERN ELECTRONICS CORPORATION
By: _____________________ By: /s/ XXXXXX XXXXXXX
Name:_____________________ Xxxxxx Xxxxxxx
Title: ___________ Secretary Chairman of the Board and
Chief Executive Officer
Attest: NATIONAL CITY BANK
By: _______________________ By:____________________________
Name:______________________ Name:__________________________
Title: ________ Secretary Title: _________ President
Exhibit A
[Form of Rights Certificate]
Certificate No. ____ ____ Rights
NOT EXERCISABLE AFTER OCTOBER 31, 2006 OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
Southern Electronics Corporation
This certifies that ________________________________, or
registered assigns, is the registered owner of the number of
Rights set forth set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of October 31, 1996 (the "Rights
Agreement"), between Southern Electronics Corporation, a Delaware
corporation (the "Company"), and National City Bank, a national
banking association (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (Atlanta, Georgia time) on
October 31, 2006 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, a
number of shares of Common Stock (the "Common Stock") of the
Company equal to eight shares of Common Stock multiplied by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding on the Stock Acquisition Date, and the
denominator of which is the number of Rights outstanding on the
Stock Acquisition Date that are not beneficially owned by an
Acquiring Person or its Affiliates or Associates, at a purchase
price per share equal to twenty percent (20%) of the Current
Market Price on the Stock Acquisition Date (the "Purchase
Price"), as those terms are defined in Section 1 of the Rights
Agreement, upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related
Certificate duly executed. The Purchase Price may be paid in cash
or by certified bank check or money order payable to the Company.
The number of Rights evidenced by this Rights Certificate (and
the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of
__________________________, based upon the Common Stock as
constituted at such date.
These rights shall only become exercisable upon the
occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this
Certificate are beneficially owned by a person other than (i) an
Acquiring Person or an Affiliate or Associate of any such Person
(as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate,
or (iii) under certain circumstances specified in the Rights
agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, an Affiliate or Associate of any such
Person. If the Rights are beneficially owned by any of the
Persons specified in clauses (i), (ii) or (iii) of the preceding
sentence, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Common Stock or other
securities, which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by this
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written
request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.01 per Right at
any time prior to the earlier of the close of business on (i) the
time any Person first becomes an Acquiring Person, and (ii) the
Final Expiration Date.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares of Common Stock or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall
have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ____________ __, 199__
SOUTHERN ELECTRONICS CORPORATION
ATTEST:
____________________________ By ________________________
Name: ______________________ Name: ____________________
___________ Secretary Title:_____________________
Countersigned:
NATIONAL CITY BANK, N.A.
ATTEST:
____________________________ By ________________________
Name: ______________________ Name: ____________________
_________ Secretary Title:___________________
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Rights Certificate)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto _____________________
______________________________________________________________
(Please print name and address of transferee)
______________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _________________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ______________________, 199__
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person, an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person, an Affiliate or
Associate of any such Person.
Dated: ________________, 199__ _______________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights Represented
by the Rights Certificate)
To: SOUTHERN ELECTRONICS CORPORATION
The undersigned hereby irrevocably elects to exercise _____
Rights represented by this Rights Certificate to purchase the
shares of Common Stock issuable upon the exercise of the Rights
(or such other securities of the Company or of any other Person
which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name
of and delivered to:
__________________
Please insert social security | |
or other identifying number: |____________________________|
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
__________________________
Please insert social security
or other identifying number______________________________________
______________________________________________________________
(Please print name and address)
______________________________________________________________
Dated: _________________, 19__
________________________________
Signature
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person, an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person, an Affiliate or
Associate of any such Person.
Dated: ________________, 19__ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
* The portion of the legend in brackets shall be inserted only
if applicable, shall be modified to apply to an Acquiring Person
as applicable, and shall replace the preceding sentence.
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On October 31, 1996, the Board of Directors of Southern
Electronics Corporation (the "Company") declared a dividend
distribution of one Right for each outstanding share of Company
Common Stock (the "Common Stock") to stockholders of record at
the close of business on November 12, 1996. Each Right entitles
the registered holder to purchase from the Company a number of
shares of Common Stock equal to eight shares of Common Stock
multiplied by a fraction, the numerator of which is the number of
shares of Common Stock outstanding on the Stock Acquisition Date,
and the denominator of which is the number of Rights outstanding
on the Stock Acquisition Date that are not beneficially owned by
an Acquiring Person or its Affiliates or Associates, at a
Purchase Price per share of 20% of Current Market Value, measured
as of the date that an announcement is made that a person has
acquired sufficient shares to become an Acquiring Person (12%).
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
National City Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
Certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) 10 days following a public announcement
that a person or a group of affiliated or associated persons has
acquired beneficial ownership of 12% or more of the outstanding
shares of Common Stock of the Company (an "Acquiring Person") or
(ii) 10 days following the commencement of a tender offer or an
exchange offer that would result in a person or group
beneficially owning 12% or more ofsuch outstanding shares of
Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred only with such Common Stock certificates, (ii) new
Common Stock Certificates issued after November 12, 1996 will
contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any
certificates for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by
such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on October 31, 2006,
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
If at any time following the Distribution Date, a Person
becomes the owner of more than 12% of the then outstanding shares
of Common Stock, each holder of a Right will thereafter have
the right to receive, upon exercise, a number of shares of Common
Stock equal to eight shares of Common Stock multiplied by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding on the Stock Acquisition Date, and the
denominator of which is the number of Rights outstanding on the
Stock Acquisition Date that are not Beneficially Owned by
the Acquiring Person or its Affiliates or Associates. The price
for the exercise of each Right shall be equal to the product of
(x) 20% of the then Current Market Price of the Common Stock on
the Stock Acquisition Date, multiplied by (y) the number of
shares of Common Stock to be received upon exercise. For
example, if the Current Market Value of a share of Common Stock
were $5.00 at the Stock Acquisition Date, and if the Acquiring
Person owned 50% of the then outstanding Common Stock when the
Rights became exercisable, the exercise price would be
$16.00, and the number of shares purchasable with each right
would be sixteen.
Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not
exercisable following the occurrence of the events set forth
above until such time as the Rights are no longer redeemable by
the Company as set forth below.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination in which the Company is not the
surviving corporation, or (ii) all of its shares are acquired in
a share exchange or the Company engages in a merger or
consolidation in which all or part of its outstanding shares of
Common Stock are changed into or exchanged for stock, other
securities or assets of any other person or (iii) 50%
or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, a number of shares of
common stock of the acquiring company equal to the product of
eight times the result obtained by dividing the current market
price of the Company's Common Stock by the current market price
of the common stock of the acquiring corporation or, if such
stock is not traded in public markets, of its parent corporation.
The purchase price will be calculated on the same basis as if the
Right holder were exercising a Right to purchase Common Stock of
the Company at that time.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Rights will be
issued, and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Rights on the last trading date
prior to the date of adjustment. No fractional shares will be
issued upon exercise of the Rights, and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Common Stock on the last trading date prior to the date of
exercise.
In general, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right, at any time before a
Person becomes an Acquiring Person. Immediately upon the
action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
The provisions of the Rights Agreement may be amended by
the Board of Directors prior to the time a Person becomes an
Acquiring Person. After such date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any
ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that
no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
As of the close of business on October 30, 1996, there were
7,129,747 shares of Common Stock of the Company outstanding, and
325,590 shares of Common Stock of the Company in the treasury.
As of October 30, 1996, options to purchase 1,595,325 shares of
Common Stock were outstanding.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that
attempts to acquire the Company in a manner which causes the
Rights to become exercisable, unless the terms of an offer for
all shares are first approved by the Board and the Rights
redeemed by the Company. The Rights, however, should not affect
any prospective offeror willing to make an offer at a fair price
and otherwise in the best interests of the Company and its
stockholders, as determined by the Board, or willing to negotiate
with the Board. The Rights should not interfere with any merger
or other business combination approved by the Board since the
Board may, at its option, before the merger or business
combination, redeem all, but not less than all, of the
then-outstanding Rights at the redemption price.
In addition, certain provisions of the Company's Certificate
of Incorporation, as amended (the "Certificate of
Incorporation"), and Amended and Restated Bylaws (the "Bylaws")
may have anti-takeover effects. For example, Article Ninth of the
Certificate of Incorporation provides that members of the Board
of Directors are elected for three year staggered terms, which
will make it difficult for a hostile acquiror to gain immediate
control of the Board of Directors. Directors elected to
staggered terms may only be removed by the stockholders for
cause. In addition, Article Fourth of the Certificate of
Incorporation grants authority to the Board of Directors of the
Company to issue preferred stock and to fix the designation,
powers, preferences and any special rights of any series of such
preferred stock, and the qualifications, limitations and
restrictions of that series. Article I of the Bylaws provides
that stockholders must give not less than 120 days advance notice
of any matter the stockholders intend to raise at any annual
stockholder meeting.
Certain provisions of the Delaware General Corporation Law
(the "Delaware Code"), to which the Company is subject, also may
have the effect of preventing a change in control of the
Company or in making changes in management more difficult.
Section 203 of the Delaware Code, for example, requires that
certain business combinations between the Company and certain
"interested stockholders" (as defined in Section 203) must
satisfy certain conditions unless (i) prior to the date of a
business combination the Board of Directors of the Company
approves the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder,
(ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
Company outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding, the shares owned by persons who are directors and
also officers and employee stock plans of the Company in which
employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or (iii) on or subsequent
to the date the stockholder becomes an interested stockholder,
the business combination is approved by the Board of Directors
and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
