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EXHIBIT 4.1
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Z-TEL TECHNOLOGIES, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF FEBRUARY 19, 2001
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RIGHTS AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of February 19, 2001,
between Z-TEL TECHNOLOGIES, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation, as rights agent
(the "Rights Agent");
WITNESSETH:
WHEREAS, the Board of Directors of the Company has (i) authorized and
declared a dividend distribution of one preferred share purchase right (a
"Right") for each Common Share (as defined herein) outstanding as of the Close
of Business (as defined herein) on March 7, 2001 (the "Record Date") and a
dividend distribution for each share of Series D Preferred Stock and Series E
Preferred Stock (each as defined below) of such number of Rights as would be
received by a holder of the number of Common Shares for which such share of
Series D Preferred Stock or Series E Preferred Stock is convertible on the
Record Date, each Right initially representing the right to purchase one
one-thousandth of a Junior Preferred Share (as defined herein), upon the terms
and subject to the conditions set forth in this Agreement, and (ii) further
authorized the issuance of one Right with respect to each Common Share (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)),
in each case that shall become outstanding between the Record Date, and the
earliest of the Distribution Date, the Expiration Date or the Final Expiration
Date (each such term as defined in this Agreement).
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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 be the
Beneficial Owner of 15% or more of the Voting Power of the Common Shares of the
Company then outstanding; provided, however, that:
(i) the term "Acquiring Person" shall not
include an Exempt Person (so long as such Person remains an Exempt Person);
(ii) a Person shall not be deemed to have become
an "Acquiring Person" solely as a result of the acquisition by the Company of
shares of capital stock of the Company which, by reducing the number or Voting
Power of shares outstanding, increases the Voting Power of the shares
beneficially owned by such Person to 15% or more of the Voting Power of the
Common Shares; provided, however, that if a Person shall so become the
Beneficial Owner of Common Shares of the Company representing 15% or more of the
Voting Power of the Common Shares of the Company then outstanding by reason of
the acquisition by the Company of shares of capital stock of the Company and
shall, after such share purchases by the Company, purchase or otherwise take
action to cause it to become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be an Acquiring Person;
(iii) a Person shall not be deemed to have become
an "Acquiring Person" if the Board of Directors of the Company in its good faith
judgment determines that a Person has inadvertently become the Beneficial Owner
of Common Shares of the Company that would otherwise cause such Person to become
an Acquiring Person and the Board of Directors in
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its sole discretion provides such Person with a designated period to divest a
sufficient number of shares so that such Person no longer is the Beneficial
Owner of Common Shares of the Company that would otherwise cause such Person to
be an Acquiring Person, and such Person has so divested such shares at the end
of any such designated period and has not acquired any additional shares of
capital stock of the Company prior to the end of such designated period; and
(iv) Common Shares of the Company Beneficially
Owned by the Company or any Subsidiary of the Company shall not be considered
outstanding for purposes of calculating any Person's percentage ownership of the
Voting Power of the outstanding Common Shares of the Company.
(b) "Adjustment Shares" shall have the meaning set forth
in Section 11(a)(ii).
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights),
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warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of or to "Beneficially Own" securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates pursuant to, and in accordance
with the General Rules and Regulations promulgated under the Exchange Act, until
such tendered securities are accepted for purchase or exchange; or (B) the right
to vote or dispose of or "beneficial ownership" (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of
this Agreement) of (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
securities if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the General Rules and Regulations under the Exchange Act, (2)
is not also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report) and (3) does not constitute a trust,
proxy, power of attorney or other device with the purpose or effect of allowing
two or more persons, acting in concert, to avoid being deemed "Beneficial
Owners" of such security or otherwise avoid the status of "Acquiring Person"
under the terms of this Agreement or as part of a plan or scheme to avoid the
reporting requirements under Schedule 13D or Sections 13(d) or 13(g) of the
Exchange Act; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliates or Associates 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 as described in the proviso to
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clause (B) of subparagraph (ii) of this Section 1(d)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to Beneficially Own under this Agreement.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of
Delaware or the State of Florida are authorized or obligated by law or executive
order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Tampa, Florida time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Tampa, Florida time, on the next
succeeding Business Day.
(g) "Common Shares," when used with reference to the
Company, shall mean shares of the common stock, par value $.01 per share, of the
Company. "Common Shares," when used with reference to any Person other than the
Company, shall mean the capital stock or other equity interests with the
greatest per share or per unit voting power of such other Person or, if such
other Person is a Subsidiary of or is controlled by another Person, the Person
or Persons which ultimately control such first-mentioned Person.
(h) "Common Share Equivalents" shall have the meaning set
forth in Section 11(a)(iii).
(i) "Current Market Price" shall have the meaning set
forth in Section 11(d).
(j) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
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(k) "Distribution Date" shall have the meaning set forth
in Section 3(a).
(l) "Equivalent Preferred Share" shall have the meaning
set forth in Section 11(b).
(m) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(n) "Exchange Ratio" shall have the meaning set forth in
Section 24(a).
(o) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person or entity organized, appointed,
established or holding Common Shares of the Company for or pursuant to the terms
of any such employee benefit plan, (v) D. Xxxxxxx Xxxxx, Xxxxx Xxxx Xxxxx, G/CJ
Investments, L.P., a Delaware limited partnership, and G/CJ Investments, Inc., a
Delaware corporation, and their respective Affiliates and Associates, and (vi)
Xxxxx Brothers Xxxxxxxx & Co., The 1818 Fund III L.P., T. Xxxxxxx Xxxx and
Xxxxxxxx X. Xxxxxx and their respective Affiliates and Associates (collectively,
the "BBH Parties"), provided that no BBH Party shall be an Exempt Person (A) if
after the date hereof, the BBH Parties, individually or collectively, acquire in
one or more transactions (whether related or unrelated) additional Beneficial
Ownership of Common Shares of the Company representing more than 1% of the
outstanding Common Shares of the Company, or (B) from and after such time as the
BBH Parties collectively no longer Beneficially Own 15% or more of the Voting
Power of the outstanding Common Shares of the Company.
(p) "Expiration Date" shall have the meaning set forth in
Section 7(a).
(q) "Final Expiration Date" shall have the meaning set
forth in Section 7(a).
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(r) "Junior Preferred Shares" shall mean shares of Series
F Junior Participating Preferred Stock, par value $.001 per share, of the
Company, having the rights, preferences and limitations set forth in the
Certificate of Designations attached to this Agreement as Exhibit A, and, to the
extent there are not a sufficient number of shares of Series F Junior
Participating Preferred Stock authorized to permit the full exercise of the then
outstanding Rights, any other series of preferred stock of the Company
designated for such purpose by the Board of Directors of the Company containing
terms substantially similar to the terms of the Series F Junior Participating
Preferred Stock.
(s) "Nasdaq National Market" shall have the meaning set
forth in Section 9(b).
(t) "Person" shall mean any individual, firm,
corporation, partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(u) "Principal Party" shall have the meaning set forth in
Section 13(b).
(v) "Purchase Price" shall have the meaning set forth in
Section 4(a).
(w) "Record Date" shall have the meaning set forth in the
recitals clause at the beginning of this Agreement.
(x) "Redemption Date" shall mean the date on which the
Rights are redeemed as provided in Section 23.
(y) "Redemption Price" shall have the meaning set forth
in Section 23(a).
(z) "Rights" shall have the meaning set forth in the
recitals clause at the beginning of this Agreement.
(aa) "Rights Certificates" shall have the meaning set
forth in Section 3(a).
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(bb) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).
(cc) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).
(dd) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a).
(ee) "Securities Act" shall mean the Securities Act of
1933, as amended.
(ff) "Series D Preferred Stock" shall mean the Series D
Convertible Preferred Stock, par value $.01 per share, of the Company.
(gg) "Series E Preferred Stock" shall mean the Series E
Convertible Preferred Stock, par value $.01 per share, of the Company.
(hh) "Subsidiary" of a Person shall mean any corporation
or other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are Beneficially Owned, directly or
indirectly, or otherwise controlled by such Person.
(ii) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii).
(jj) "Summary of Rights" shall have the meaning set forth
in Section 3(b).
(kk) "Trading Day" shall have the meaning set forth in
Section 11(d).
(ll) "Triggering Event" shall mean any Section 11(a)(ii)
Event or Section 13 Event.
(mm) "Voting Power" shall mean the total number of votes
entitled to be cast generally by the holders of the Common Shares of the Company
then outstanding.
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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, shall prior to the Distribution Date
also be the holders of the Common Shares of the Company or the Series D
Preferred Stock or Series E Preferred Stock, as the case may be) in accordance
with the terms and conditions of this Agreement, and the Rights Agent hereby
accepts such appointment. The Company from time to time may appoint such
co-Rights Agents as it may deem necessary or desirable. If the Company appoints
one or more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agents shall be as the Company shall determine.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the first public
announcement (which for this purpose shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.(or if such
announcement occurs before the Record Date, the Close of Business on the Record
Date); provided, however, that if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a), then no such Distribution Date
shall be deemed to have occurred; or (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the intent of any Person
(other than an Exempt Person) to commence, a tender or exchange offer the
consummation of which would result in any Person, together with its Affiliates
and Associates, becoming the Beneficial Owner of 15% or more of the Voting Power
of the then outstanding Common Shares of the Company (irrespective
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of whether any shares are actually purchased pursuant to such offer) (the
earlier of such events described in clauses (i) and (ii) being referred to in
this Agreement as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(c)) by the certificates for the Common
Shares or the Series D Preferred Stock or Series E Preferred Stock, as the case
may be, registered in the names of the holders thereof (which certificates for
such Common Shares of the Company or the Series D Preferred Stock or Series E
Preferred Stock, as the case may be, shall be deemed also to be certificates for
such Rights other than for purposes of this Section 3 and any provision of this
Agreement referring to the issuance or distribution of Rights Certificates) and
not by separate Rights Certificates, and (y) the Rights (and the right to
receive separate Rights Certificates) will be transferable only in connection
with the transfer of the underlying Common Shares of the Company or the Series D
Preferred Stock or Series E Preferred Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first class, insured, postage prepaid mail, to each record holder of Common
Shares, Series D Preferred Stock and Series E Preferred Stock, as of the Close
of Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more rights
certificates in substantially the form of Exhibit B hereto, evidencing one Right
for each Common Share and an appropriate number of Rights for each share of
Series D Preferred Stock and Series E Preferred Stock (a "Rights Certificate"),
so held, subject to adjustment as provided in this Agreement. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates and will be transferable separately from the Common Shares of the
Company, the Series D Preferred Stock and the Series E Preferred Stock.
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(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, substantially in the form attached hereto as Exhibit C ("Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of Common
Shares of the Company and Series D Preferred Stock and Series E Preferred Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. The Rights Agent will mail to any holder of
the Rights Certificate a copy of this Agreement without charge to the holder but
at the expense of the Company after receipt of a written request therefor.
(c) With respect to certificates for Common Shares of the
Company, Series D Preferred Stock and Series E Preferred Stock outstanding as of
the Close of Business on the Record Date, until the Distribution Date (or, if
earlier, the Expiration Date or the Final Expiration Date), the Rights will be
evidenced by certificates for Common Shares of the Company or the Series D
Preferred Stock or Series E Preferred Stock, as the case may be, registered in
the names of the holders thereof together with a copy of the Summary of Rights.
Until the Distribution Date (or, if earlier, the Expiration Date or Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares of the Company or Series D Preferred Stock or Series E Preferred Stock
(including pursuant to the conversion of the Series D Preferred Stock or Series
E Preferred Stock into Common Shares of the Company) outstanding on the Record
Date, with or without a copy of the Summary of Rights, also shall constitute the
surrender for transfer of the Rights associated with the Common Shares of the
Company, Series D Preferred Stock or Series E Preferred Stock represented
thereby; it being agreed that in the case of the conversion of the Series D
Preferred Stock or the Series E Preferred Stock into Common Shares of the
Company, in accordance with this Agreement there shall be issued one
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Right with respect to each Common Share that shall be issued upon such
conversion (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p)).
(d) Rights shall be issued in respect of all Common
Shares of the Company or Series D Preferred Stock or Series E Preferred Stock
(including pursuant to the conversion of the Series D Preferred Stock or Series
E Preferred Stock into Common Shares) which are issued (whether originally
issued or from the Company's treasury) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date or the Final Expiration
Date. Until the Distribution Date, certificates representing Common Shares,
Series D Preferred Stock or Series E Preferred Stock also shall be deemed to be
certificates for the associated Rights, and shall have impressed on, printed on,
written on or otherwise affixed to them substantially the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a
Rights Agreement between Z-Tel Technologies, Inc.
and American Stock Transfer & Trust Company, as
Rights Agent, dated as of February 19, 2001 (the
"Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which
is on file at the principal executive offices of
Z-Tel Technologies, Inc. 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. Z-Tel Technologies, Inc. will mail to
the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing,
without charge, after receipt by it of a written
request therefor. Under certain circumstances as
provided in the Rights Agreement, Rights issued to,
held by or Beneficially Owned by Acquiring Persons
or their Associates or Affiliates (as such terms are
defined in the Rights Agreement) or any subsequent
holder of such Rights will become null and void.
With respect to such certificates containing the foregoing legends, the Rights
associated with the Common Shares of the Company, Series D Preferred Stock or
Series E Preferred Stock represented by such certificates, as the case may be,
shall, until the earliest of the Expiration
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Date, the Final Expiration Date or the Distribution Date, be evidenced by such
certificates alone and holders of record of Common Shares of the Company, Series
D Preferred Stock or Series E Preferred Stock, as the case may be, also shall be
the holders of record of the associated Rights, and the surrender for transfer
of any such certificate shall also constitute the surrender for transfer of the
Rights associated with the Common Shares of the Company, Series D Preferred
Stock or Series E Preferred Stock represented thereby. If the Company purchases
or acquires any Common Shares of the Company, Series D Preferred Stock or Series
E Preferred Stock (including pursuant to the conversion of the Series D
Preferred Stock or Series E Preferred Stock into Common Shares) after the Record
Date but prior to the Distribution Date, any Rights associated with such Common
Shares, Series D Preferred Stock or Series E Preferred Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares of the Company, Series D Preferred
Stock or Series E Preferred Stock which are no longer outstanding; it being
agreed that in the case of the conversion of the Series D Preferred Stock or the
Series E Preferred Stock into Common Shares, in accordance with this Agreement
there shall be issued one Right with respect to each Common Share that shall be
issued upon such conversion (as such number may hereinafter be adjusted pursuant
to the provisions of Section 11(p)).
Section 4. Form of Rights Certificates.
(a) Rights Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
hereto, and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be
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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 or trading
system on which the Rights may from time to time be listed or traded, or to
conform to usage. Subject to the provisions of Sections 11 and 22, the Rights
Certificates, whenever distributed, shall entitle the holders thereof to
purchase such number of one one-thousandths of a Junior Preferred Share, as
shall be set forth therein at the price per one one-thousandth of a Junior
Preferred Share set forth therein (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 therein and in this
Agreement.
(b) Notwithstanding any other provision of this
Agreement, any Rights Certificate that represents Rights that are or were at any
time on or after the Distribution Date Beneficially Owned by an Acquiring Person
or any Affiliate or Associate thereof (or any transferee of such Rights) shall
have impressed on, printed on, written on or otherwise affixed to it (if the
Company or the Rights Agent has knowledge that such Person is an Acquiring
Person or an Associate or Affiliate thereof or transferee of such Person or a
nominee of any of the foregoing) the following legend:
The Beneficial Owner of the Rights represented by
this Rights Certificate is an Acquiring Person or an
Affiliate or Associate (as such terms are defined in
the Rights Agreement) of an Acquiring Person or a
subsequent holder of such Rights Certificate
Beneficially Owned by such Persons. Accordingly,
under circumstances specified in the Rights
Agreement, this Rights
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Certificate and the Rights represented hereby will
become null and void.
Notwithstanding the above provision, failure to place such legend on any Rights
Certificate representing Rights which are otherwise null and void pursuant to
the terms of this Agreement shall not affect the null and void status of such
Rights.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf
of the Company by its Chairman of the Board, Chief Executive Officer, President
or any Vice President, either manually or by facsimile signature, shall have
affixed thereto the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned. If
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 Certificate 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 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 office designated for such purposes, books
for registration and transfer of the Rights
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Certificates issued under this Agreement. 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, the date of
each of the Rights Certificates, and the certificate numbers for 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, at any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the earlier of the Expiration
Date or the Final Expiration Date, any Rights Certificate or Rights Certificates
(other than such Rights Certificates representing Rights that have become null
and void pursuant to this Agreement or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the holder of record to
purchase a like number of one one-thousandths of a Junior Preferred Share (or,
following a Triggering Event, Common Shares of the Company, other securities,
cash or other assets, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitles such holder (or former holder in the case
of a transfer) to purchase. Any holder of record desiring to transfer any Rights
Certificate or Rights Certificates shall surrender the Rights Certificate or
Rights Certificates at the office of the Rights Agent designated for such
purposes with the form of assignment on the reverse side thereof (or enclose
with such Rights Certificate or Rights Certificates a written instrument of
transfer in a form satisfactory to the Company and the Rights Agent), duly
executed by the holder of record thereof or his attorney duly authorized in
writing, and with such signature duly guaranteed. Any holder of record desiring
to split up, combine or exchange any Rights Certificate or Rights Certificates
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shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be split up, combined
or exchanged at the office of the Rights Agent designated for such purposes.
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 holder of record 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 of
Associates thereof as the Company shall request. Thereupon the Rights Agent
(subject to Section 4(b), Section 7(e), Section 14 and Section 24) shall
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, if requested by
the Company, 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, subject to the
provisions of Section 4(b), Section 7(e), Section 14 and Section 24, will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
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(a) Subject to Section 7(e), at any time after the
Distribution Date, the holder of record of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement,
including without limitation, the restrictions on exercisability set forth in
Section 9(b), Section 11(a)(iii) and Section 23(a)), in whole or in part upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate contained in the form of election to purchase on the reverse
side thereof duly executed (with such signature duly guaranteed), to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price with respect to the total number of
one one-thousandths of a Junior Preferred Share (or other securities, cash or
other assets, as the case may be, as to which such surrendered Rights are then
exercisable), subject to adjustment as provided in this Agreement, at or prior
to the earlier of (i) the Close of Business on February 19, 2011 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (such date being herein referred to as the "Expiration Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24.
(b) The Purchase Price with respect to each Right shall
initially be $45 for each one one-thousandth of a Junior Preferred Share issued
pursuant to the exercise of a Right. The Purchase Price and the number of one
one-thousandths of a Junior Preferred Share or other securities or consideration
to be acquired upon exercise of a Right shall be subject to adjustment from time
to time as provided in Sections 11 and 13. The Purchase Price shall be payable
in lawful money of the United States of America in accordance with Section 7(c).
(c) Except as provided in Section 7(e), upon receipt of a
Rights Certificate representing exercisable Rights, with the form of election to
purchase and the certificate contained in the form of election to purchase duly
executed, accompanied by payment of the
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Purchase Price for the shares or other securities or assets to be purchased and
an amount equal to any applicable transfer tax, by cash, certified check or
official bank check payable to the order of the Company, the Rights Agent,
subject to Section 20(j), shall thereupon promptly (i) (A) requisition from any
transfer agent of the Junior Preferred Shares (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number
of Junior Preferred Shares so elected to be purchased and the Company will
comply and hereby authorizes and directs such transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of Junior Preferred Shares issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths of a Junior Preferred
Share as are to be purchased (in which case certificates for the Junior
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the holder of record of such Rights Certificate, registered in such
name or names as may be designated by such holder, and (iv) when appropriate,
after receipt promptly deliver such cash to or upon the order of the holder of
record of such Rights Certificate; provided, however, that in the case of a
purchase of securities, other than Junior Preferred Shares, pursuant to Section
13, the Rights Agent shall promptly take the appropriate actions corresponding
to the foregoing clauses (i) through (iv). If the Company is obligated to issue
other securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), the Company will make all
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arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a Triggering
Event that, upon an exercise of Rights, a number of Rights be exercised so that
only whole Junior Preferred Shares would be issued.
(d) If the holder of record 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 to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the 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 from an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such (and any subsequent transferees of such transferee), or (iii) a
transferee of an Acquiring Person (or 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 a primary
purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action, and any holder (including any subsequent holder) of
such Rights shall thereupon have no rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall
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use all reasonable efforts to insure that the provisions of this Section 7(e)
are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure or inability 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 holder of record upon the occurrence of
any purported exercise as set forth in this Section 7 unless such holder of
record 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 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 to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
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 or cause to be destroyed 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.
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(a) The Company covenants and agrees that it will cause
to be reserved and kept available, out of and to the extent of its authorized
and unissued Junior Preferred Shares not reserved for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares or other securities) or shares held in its treasury, the
number of Junior Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares or other securities) that, as provided in this Agreement,
including Section 11(a)(iii), will be sufficient to permit the exercise in full
of all outstanding Rights. Prior to the occurrence of a Triggering Event, the
Company shall not be obligated to cause to be reserved and kept available out of
its authorized and unissued Common Shares or shares of preferred stock (other
than Junior Preferred Shares), any such Common Shares or any shares of preferred
stock (other than Junior Preferred Shares) to permit exercise of outstanding
Rights.
(b) The Company shall (i) cause, from and after such time
as the Rights become exercisable, the Rights and all Junior Preferred Shares
(and following the occurrence of a Triggering Event, Common Shares, issued or
reserved for issuance upon exercise thereof) to be listed or admitted for
trading by the NASDAQ National Market ("Nasdaq National Market") or any other
national securities exchange upon notice of issuance upon such exercise and (ii)
if then necessary to permit the offer and issuance of such Junior Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares or
other securities), register and qualify such Junior Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares or other
securities) under the Securities Act and any applicable state securities or
"blue sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the Expiration Date or the Final Expiration Date.
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The Company may temporarily suspend, for a period of time not to exceed ninety
days, the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective or to comply with such blue sky laws. 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.
(c) The Company covenants and agrees that it will take
all such action as may be necessary to insure that all Junior Preferred Shares
(and following the occurrence of a Triggering Event, Common Shares or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.
(d) 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 or of any Junior Preferred Shares (or Common Shares 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 certificates for Junior Preferred Shares
(or Common Shares or other securities, as the case may be) upon exercise of
Rights in a name other than that of, the holder of record of the Rights
Certificate, and the Company shall not be required to issue or deliver a Rights
Certificate or certificate for Junior Preferred Shares (or Common Shares or
other securities, as the case may be) to a Person other than such holder of
record, until any such tax shall have been paid (any
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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. Preferred Shares Record Date. Each Person in whose
name any certificate for Junior Preferred Shares (or Common Shares 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 the Junior
Preferred Shares (or Common Shares 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 any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Junior Preferred Shares (or Common Shares 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 on, and such certificate shall be
dated, the next succeeding Business Day on which the Junior Preferred Shares (or
Common Shares or other securities) 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 otherwise
provided in this Agreement.
Section 11. Adjustments to Number and Kind of Shares; Number of
Rights or Purchase Price. The number and kind of shares subject to purchase upon
the exercise of each Right, the number of Rights outstanding and the Purchase
Price are subject to adjustment from time to time as provided in this Section
11.
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(a) (i) If the Company shall at any time after the
date of this Agreement (A) declare or pay any dividend on Junior Preferred
Shares payable in Junior Preferred Shares, (B) subdivide or split the
outstanding Junior Preferred Shares into a greater number of shares, (C) combine
or consolidate the outstanding Junior Preferred Shares into a smaller number of
shares or effect a reverse split of the outstanding Junior Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Junior
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in Section 7(e) or this Section
11(a), the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Junior Preferred Shares or capital
stock, as the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of Junior Preferred Shares or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date and at a time when the Junior Preferred Shares transfer books of the
Company were open, the holder thereof would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one such Right be less than the per share par value
of the shares of capital stock of the Company issuable upon exercise of the
Right. If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
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(ii) Subject to Section 23(a) and Section 24, if
any Person shall at any time after the date of this Agreement become an
Acquiring Person (a "Section 11(a)(ii) Event"), then, except as otherwise
provided in this Section 11, promptly following the occurrence of such event,
proper provision shall be made so that each holder of a Right (except as
provided in Section 7(e)) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement in lieu of the number of one one-thousandths of a Junior
Preferred Share, such number of Common Shares, as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-thousandths of a Junior Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product, following such first
occurrence, shall be referred to as the "Purchase Price" with respect to each
Right for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)) per share of such class of Common Shares
for which a Right is exercisable on the date of such first occurrence (such
number of shares is herein called the "Adjustment Shares"); provided that the
Purchase Price and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after the date of
such first occurrence; and provided, further, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 shall apply and
no adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) If the number of Common Shares which are
authorized by the Company's certificate of incorporation but which are not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights, is not sufficient to permit the exercise in full of
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the Rights in accordance with Section 11(a)(ii) and the Rights shall become so
exercisable, the Company shall take all such action as may be necessary
(including seeking stockholder approval for the authorization of additional
shares) to authorize additional Common Shares for issuance upon exercise in full
of the Rights; provided, however, that if the Company after using its reasonable
best efforts to do so is unable to cause the authorization of a sufficient
number of additional Common Shares within 120 days (the "Substitution Period"),
the Company shall: (A) determine the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") and (B) with respect to each
Right (subject to Section 7(e)), upon the exercise of such Right and payment of
the applicable Purchase Price, make adequate provision to substitute for the
Adjustment Shares (1) cash, (2) a reduction in the Purchase Price, (3) Common
Shares or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock of the Company which, by virtue
of having dividend, voting and liquidation rights substantially comparable to
the class of Common Shares of the Company for which a Right is exercisable are
deemed in good faith by the Board of Directors of the Company to have
essentially the same value as the class of Common Shares of the Company for
which a Right is exercisable (such shares or units of shares of preferred stock
are herein called "Common Share Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value which, when added to the value of the Common Shares of the
Company actually issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined in good faith by
the Board of Directors of the Company based upon the advice of a nationally
recognized independent investment banking firm selected in good faith by the
Board of Directors of the Company; provided, however, that if the
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Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 120 days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares of the Company for which
a Right is exercisable (to the extent available) and then, if necessary, cash or
shares of capital stock of the Company, which shares and/or cash have an
aggregate value equal to the excess of the Current Value over the Purchase
Price. To the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e), 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(a)(iii), the
value of each Adjustment Share shall be the Current Market Price per Common
Share of the Company on the Section 11(a)(ii) Trigger Date and the per share or
per unit value of any Common Share Equivalent shall be deemed to equal the
Current Market Price per Common Share of the Company on such date.
(b) If the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Junior Preferred Shares entitling them to
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subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Junior Preferred Shares, shares having the same rights,
privileges and preferences as the Junior Preferred Shares ("Equivalent Preferred
Shares") or securities convertible into Junior Preferred Shares or Equivalent
Preferred Shares at a price per Junior Preferred Share or Equivalent Preferred
Share (or having a conversion price per share, if a security convertible into
Junior Preferred Shares or Equivalent Preferred Shares) less than the Current
Market Price (as determined pursuant to Section 11(d)) per Junior Preferred
Share on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Junior Preferred Shares outstanding on such record date, plus the
number of Junior Preferred Shares which the aggregate offering price of the
total number of Junior Preferred Shares and/or Equivalent Preferred Shares so to
be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of Junior Preferred Shares
outstanding on such record date, plus the number of additional Junior Preferred
Shares and/or Equivalent Preferred Shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). If such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Junior Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
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record date is fixed, and if such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) If the Company shall fix a record date for a
distribution to all holders of Junior Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Junior Preferred Shares, but including any dividend payable in stock
other than Junior Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d)) per Junior Preferred Share on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
Junior Preferred Share and the denominator of which shall be such Current Market
Price (as determined pursuant to Section 11(d)) per Junior Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed; and
if such distribution is not so made, the Purchase Price shall be adjusted to be
the Purchase Price which would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation under
this Agreement, other than computations made pursuant to Section 11(a)(iii), the
"Current Market Price" per Common
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Share on any date shall be deemed to be the average of the daily closing prices
per share of the Common Shares for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii), the "Current Market Price" per
Common Share on any date shall be deemed to be the average of the daily closing
prices per Common Share for the 10 consecutive Trading Days immediately
following such date; provided, however, that if the Current Market Price per
Common Share is determined during a period following the announcement by the
issuer of such Common Shares of (A) any dividend or distribution on such Common
Shares payable in Common Shares or securities convertible into Common Shares
(other than a regular quarterly cash dividend and other than the Rights), or (B)
any subdivision, combination or reclassification of such Common Shares, and
prior to the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the Current Market Price
shall be appropriately adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the Nasdaq National Market or, if the Common Shares are
not listed or admitted to trading on the Nasdaq National Market, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
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asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc., Automated Quotations System or such
other system then in use, or, if on any such date the Common Shares 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 Shares
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Shares, 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 or national market system on which the Common
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange or national market system, a Business Day. If the Common
Shares are 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.
(ii) For the purpose of any computation under
this Agreement, the "Current Market Price" of the Junior Preferred Shares shall
be determined in the same manner as set forth above for the Common Shares in
Section 11(d)(i) (other than the last 2 sentences thereof). If the Current
Market Price per Junior Preferred Share cannot be determined in the manner
provided above, the "Current Market Price" per Junior Preferred Share shall be
conclusively deemed to be an amount equal to 1000 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares of the Company occurring
after the date of this Agreement) multiplied by the
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Current Market Price per Common Share. If neither the Common Shares nor the
Junior Preferred Shares are publicly held or so listed or traded, "Current
Market Price" per share of the Junior Preferred Shares 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. For all purposes of this
Agreement, the "Current Market Price" of one one-thousandth of a Junior
Preferred Share shall be equal to the "Current Market Price" of one Junior
Preferred Share divided by 1000.
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a Common Share or other security or one-millionth of a Junior Preferred Share,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such
adjustment, or (ii) immediately prior to the Expiration Date or the Final
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any property or shares of capital stock other
than Junior Preferred Shares, thereafter the amount of such property and 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
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terms as nearly equivalent as practicable to the provisions with respect to the
Junior Preferred Shares contained in this Section 11, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Junior Preferred Shares shall
apply on like terms to any such other property or shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths of a Junior Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Junior Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of one
one-thousandths of a Junior Preferred Share for which a Right may be exercised,
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a Junior Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
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Rights shall be exercisable for the number of one one-thousandths of a Junior
Preferred Share for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 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(i), 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, 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 so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
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(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a Junior Preferred Share
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a Junior Preferred Share and the number of one one-thousandths
of a share which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
number of one one-thousandths of a Junior Preferred Share issuable upon exercise
of the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required stockholder approvals, which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one one-thousandths of a Junior
Preferred Share at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such record
date of the number of one one-thousandths of a Junior Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a Junior Preferred Share and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
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(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Junior Preferred Shares, (ii) issuance
wholly for cash of any Junior Preferred Shares at less than the Current Market
Price, (iii) issuance wholly for cash of Junior Preferred Shares or securities
which by their terms are convertible into or exchangeable for Junior Preferred
Shares, (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
Junior Preferred Shares shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions not in the ordinary course of
the Company's business, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger or sale 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 (y) prior to, simultaneously with or immediately after
such consolidation,
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merger or sale, the stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, if the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on the
outstanding Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, the number of Rights associated with each Common Share
or share of Series D Preferred Stock or Series E Preferred Stock, as the case
may be, then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share or share of Series D
Preferred Stock or Series E Preferred Stock, as the case may be, following any
such event shall equal the result obtained by multiplying the number of Rights
associated with each Common Share or share of Series D Preferred Stock or Series
E Preferred Stock, as the case may be, immediately prior to such event by a
fraction the numerator which shall be the aggregate number of Common Shares
outstanding immediately prior to the occurrence of the event (including Common
Shares issuable in respect of the conversion of the Series D Preferred Stock and
Series E Preferred Stock) and the denominator of which shall be the aggregate
number of Common Shares outstanding immediately following the occurrence of such
event (including Common
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Shares issuable in respect of the conversion of the Series D Preferred Stock and
Series E Preferred Stock).
Section 12. Certification of Adjustments. Whenever an adjustment
is made as provided in Sections 11 and 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts giving rise to such adjustment, (b) promptly file with the Rights Agent
and with each transfer agent for the Common Shares, Series D Preferred Stock,
Series E Preferred Stock or Junior Preferred Shares a copy of such certificate
and (c) if a Distribution Date has occurred, 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 Common Shares, Series D Preferred
Stock, Series E Preferred Stock) in accordance with Section 26. Notwithstanding
the foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained. Any adjustment to be made pursuant to Sections 11
and 13 of this Agreement shall be effective as of the date of the event giving
rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) If at any time following the time an Acquiring Person
becomes such, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person or Persons (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), and the Company
shall not be the surviving or continuing corporation of such consolidation or
merger, (y) any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), shall consolidate with, or merge
with and into,
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the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding Common Shares 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 (z) the Company or one or more of its
Subsidiaries shall sell or otherwise transfer to any other Person or any
Affiliate or Associate of such Person (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section
11(o)), in one transaction or a series of related transactions not in the
ordinary course of the Company's business, assets, cash flow, or earning power
aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, proper provision shall be made so that (i) each holder of
record of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of shares of validly
issued, fully paid and nonassessable and freely tradeable Common Shares of the
Principal Party (as defined herein) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a Junior Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the Purchase Price in effect immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the number of one
one-thousandths of a Junior Preferred Share for which a Right was exercisable
immediately prior to such first occurrence of a Section 11(a)(ii) Event) and (2)
dividing that product (such product, following the first occurrence of a Section
13
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Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined as
provided in Section 11(d)) per Common Share of such Principal Party on the date
of consummation of such Section 13 Event (or the fair market value on such date
of other securities or property of the Principal Party, as provided for herein);
provided that the Purchase Price and the number of Common Shares of such
Principal Party issuable upon exercise of each Right shall be further adjusted
as provided in this Agreement to reflect any events occurring after the date of
the first occurrence of a Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" for all purposes of this Agreement shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall only apply to such Principal Party following the
first occurrence of a Section 13 Event; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) 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 Common Shares thereafter deliverable upon the exercise of
the Rights; provided, however, that, upon the subsequent occurrence of any
merger, consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization 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, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had he, at the
time of such transaction, owned the Common Shares of the Principal Party
purchasable upon the
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exercise of a Right, and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a): (A) the Person that is
the issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer the Common Shares of which has the greatest market value or
(B) if no securities are so issued, (x) the Person that is the other party to
the merger or consolidation and that survives said merger or consolidation, or,
if there is more than one such Person, the Person the Common Shares of which has
the greatest market value or (y) if the Person that is the other party to the
merger or consolidation does not survive the merger or consolidation, the Person
that does survive the merger or consolidation (including the Company if it
survives); and
(2) in the case of any transaction described in
clause (z) of the first sentence in 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 as
is the issuer of Common Shares having the greatest market value of shares
outstanding; provided, however, that in any such case described
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in the foregoing (b)(i) or (b)(ii), if the Common Shares of such Person are not
at such time and have not been continuously over the preceding 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 Shares of which are and have
been so registered, the term "Principal Party" shall refer to such other Person,
or if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of authorized Common Shares 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 the
Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Sections 13(a) and (b)
shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer shall not result in a default by the
Principal Party under this Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof and further providing
that, as soon as practicable after executing such agreement pursuant to this
Section 13, the Principal Party will:
(1) prepare and file a registration statement
under the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause such
registration
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statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the date of expiration of the Rights,
and similarly comply with applicable state securities laws;
(2) use its best efforts, if the Common Shares
of the Principal Party shall become listed on a national securities exchange, to
list (or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Shares of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be listed by a national securities exchange or admitted for trading on the
Nasdaq National Market;
(3) 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 (or any
successor form) under the Exchange Act; and
(4) obtain waivers of any rights of first
refusal or preemptive rights in respect of the Common Shares of the Principal
Party subject to purchase upon exercise of outstanding Rights.
If any of the transactions described in Section 13(a) shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii), the Rights
which have not theretofore been exercised shall thereafter be exercisable in the
manner described in Section 13(a). The provisions of this Section 13 shall
similarly apply to all successive mergers, consolidations, sales, transfers or
other Section 13 Events.
(d) Furthermore, if the Principal Party which is to be a
party to a transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its certificate of incorporation, articles of
incorporation, bylaws or other instrument governing its corporate
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affairs, which provision would have the effect of (i) causing such Principal
Party to issue, in connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13, Common Shares of such Principal
Party at less than the then Current Market Price per share (determined pursuant
to Section 11(d)(i)) or securities exercisable for, or convertible into, Common
Shares of such Principal Party at less than such then Current Market Price
(other than to holders of Rights pursuant to this Section 13) or (ii) providing
for any special payment, tax or similar provisions in connection with the
issuance of Common Shares of such Principal Party pursuant to the provisions of
this 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.
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 holders of record
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 then
current market value of a whole Right. For the purposes of this Section 14(a),
the then 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.
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(b) The Company shall not be required to issue fractions
of Junior Preferred Shares (other than fractions which are integral multiples of
one one-thousandths of a Junior Preferred Share) upon exercise of the Rights, or
to exchange the Rights pursuant to Section 24 of this Agreement for fractions of
Common Shares. Fractions of Junior Preferred Shares in integral multiples of one
one-thousandth of a Junior Preferred Share may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Junior Preferred Shares. With respect to fractional
Junior Preferred Shares that are not integral multiples of one one-thousandth of
a Junior Preferred Share, if the Company does not issue fractional shares or
depositary receipts in lieu thereof, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a Junior Preferred Share. For
purposes of this Section 14(b), the current market value of one one-thousandth
of a Junior Preferred Share shall be the Current Market Price of one
one-thousandth of a Junior Preferred Share (as determined pursuant to Section
11(d)(ii)).
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of Common Shares upon exercise
of the Rights or to distribute certificates which evidence fractional Common
Shares. In lieu of fractional Common Shares, 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
per share market value of one Common Share for which a Right is exercisable. For
the purposes of
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this Section 14(c), the current per share market value of one Common Share for
which a Right is exercisable shall be the closing price of one Common Share (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(d) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares (other than fractions which are integral multiples of one one-thousandths
of a Junior Preferred Share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18, are vested in the respective holders of record of the Rights
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Shares, Series D Preferred Stock and Series E Preferred Stock); and any
holder of record of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares, Series D Preferred Stock and Series E Preferred 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 Shares, Series D
Preferred Stock and Series E Preferred Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person 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, certificates for Common Shares,
Series D Preferred Stock and Series E Preferred 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, accordingly, that they will be entitled to
specific performance of the obligations
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under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not
be evidenced by a Rights Certificate and will be transferable only in connection
with the transfer of Common Shares, Series D Preferred Stock or Series E
Preferred Stock;
(b) after the Distribution Date, the Rights Certificates
will be transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company
and the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares,
Series D Preferred Stock or Series E Preferred 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 Certificate
or the associated Common Shares, Series D Preferred Stock or Series E Preferred
Stock certificate made by anyone other than the Company or the Rights Agent or
the transfer agent of the Common Shares of the Company, the Series D Preferred
Stock or the Series E Preferred Stock) for all purposes whatsoever, and, subject
to Section 7(e), neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the
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Company nor the Rights Agent shall have any liability to any holder of a Right
or a beneficial interest in 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, that 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 of a Right or a Rights Certificate, as such, shall be entitled to
vote, receive dividends in respect of or be deemed for any purpose to be the
holder of Junior Preferred Shares or any other securities of the Company which
may at any time be issuable upon the exercise of the Rights, nor shall anything
contained in this Agreement 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 set forth in Section 25), or to
receive dividends or subscription rights in respect of any such stock or
securities, or otherwise, until the Right or Rights evidenced by such
certificate for Common Shares, Series D Preferred Stock or Series E Preferred
Stock or Rights Certificate, as the case may be, shall have been exercised in
accordance with the provisions of this Agreement.
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Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it under this Agreement
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties under
this Agreement. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent for
anything done or omitted to be done by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate, certificate for Common Shares, Series D Preferred Stock or Series E
Preferred Stock or other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.
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
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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 to this Agreement; provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. If 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 if 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 a predecessor Rights
Agent 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) If 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 such Rights Certificates so countersigned; and
if 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:
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(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 be proved or established by the Company prior to taking or suffering any
action under this Agreement, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, 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 only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of
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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 change in the exercisability of the Rights or any adjustment required under
the provisions of this Agreement or responsible for the manner, method or amount
of any such change or adjustment or the ascertaining of the existence of facts
that would require any such change in the exercisability of the Rights or any
change or adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such change or adjustment); nor
shall it by any act under this Agreement be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares or Junior
Preferred Shares or other securities to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any Common Shares or Junior Preferred
Shares or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for
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any action taken or suffered to be taken by it in good faith in accordance with
the instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become 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 in this Agreement 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 under this Agreement
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 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, split up, combination
or exchange, the certificate contained in the form of assignment or the form of
election to purchase set forth on the reverse thereof, as the case may be, has
either not been completed 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 or transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares, Series D
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Preferred Stock, Series E Preferred Stock and the Junior Preferred Shares by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days' notice in writing, mailed to
the Rights Agent or any successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares, Series D Preferred Stock, Series E
Preferred Stock and the Junior Preferred Shares by registered or certified mail,
and 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. Notwithstanding the
foregoing provisions of this Section 21, in no event shall the resignation or
removal of a Rights Agent be effective until a successor Rights Agent shall have
been appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the holder of
record 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
corporation organized and doing business under the laws of the United States or
any State thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has, or together with its
parent entity has, at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100 million. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
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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 under this
Agreement, 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 Shares, the
Series D Preferred Stock, the Series E Preferred Stock and the Junior Preferred
Shares, and mail a notice thereof in writing to the holders of record of the
Rights Certificates or, if prior to the Distribution Date, the holders of record
of the Common Shares, the Series D Preferred Stock and the Series E Preferred
Stock. 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 the Board of Directors to reflect any adjustment
or change in the Expiration Date, the Purchase Price and the number or kind or
class of shares of stock 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 Common Shares, Series D
Preferred Stock or Series E Preferred Stock following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (i) shall, with
respect to Common Shares, Series D Preferred Stock or Series E Preferred Stock
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution Date, or
upon the
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exercise, conversion or exchange of securities issued by the Company hereinafter
but prior to the Distribution Date, and (ii) 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 (x) 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 (y) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment 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 earlier of (i) any Person becoming an Acquiring
Person (or, if any Person becomes an Acquiring Person prior to the Record Date,
by action taken by the Board of Directors of the Company prior to any Person
becoming an Acquiring Person but effective as of the Close of Business on the
Record Date), or (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
redemption price being referred to in this Agreement as the "Redemption Price").
The redemption of the Rights by the Board of Directors of the Company may be
made effective at such time, on such basis and with such conditions as the Board
of Directors of the Company may establish in good faith.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to Section 23(a),
and without any further action
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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. Promptly after such 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 of the Common Shares, the Series D
Preferred Stock and the Series E Preferred 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
notice required by this Section 23 or any defect therein shall not affect the
legality or validity of any redemption hereunder. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 or in Section 24, and other than in connection with the purchase of
Common Shares, Series D Preferred Stock or Series E Preferred Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
7(e)) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such exchange ratio
being referred to in this
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Agreement as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Voting Power of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares 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 such Rights at the last addresses of the holders 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 Common Shares for Rights will be effected and, in the event
of any partial exchange, the number and kind of Rights which will be exchanged.
The failure to give notice required by this Section 24 or any defect therein
shall not affect the legality or validity of any exchange hereunder.
(c) Any partial exchange shall be effected pro rata based
on the number of Rights being exchanged (other than Rights which have become
null and void pursuant to the provisions of Section 7(e)) held by each holder of
Rights.
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(d) If there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of such whole Common Shares. For
purposes of this Section 24(d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d) (i)) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) If the Company, at any time after the Distribution
Date, shall propose to (i) effect any of the transactions referred to in Section
11(a)(i) or to pay any dividend to the holders of record of its Junior Preferred
Shares payable in stock of any class or to make any other distribution to the
holders of record of its Junior Preferred Shares (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), (ii) offer
to the holders of record of its Junior Preferred Shares options, warrants or
other rights to subscribe for or to purchase Junior Preferred Shares (including
any security convertible into or exchangeable for Junior Preferred Shares) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, (iii) effect any
reclassification of its Junior
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Preferred Shares or any recapitalization or reorganization of the Company, (iv)
effect any consolidation or merger with or into, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions not in
the ordinary course of the Company's business, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of record of Rights, in accordance with Section 26, notice of such
proposed action, which shall specify the record date for the purposes of such
transaction referred to in Section 11(a)(i), or such dividend or distribution,
or the date on which such reclassification, recapitalization, reorganization,
consolidation, merger, sale or transfer of assets, liquidation, dissolution, or
winding up is to take place and the record date for determining participation
therein by the holders of record of Junior Preferred Shares, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of record of the Junior Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of record of Junior Preferred Shares, whichever shall be
the earlier.
(b) If any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Agreement are proposed, then, in any such case,
the Company shall give to each holder of Rights, in accordance with Section 26,
notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13, as the case
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may be, and, upon consummating such transaction, shall similarly give notice
thereof to each holder of Rights.
(c) If any Section 11(a)(ii) Event shall occur, then all
references in this Section 25 to Junior Preferred Shares shall be deemed
thereafter to refer to the class of Common Shares or other securities for which
the Rights are then exercisable.
Section 26. Notices. Except as provided in Section 21, notices or
demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of record of any Rights Certificate or Right 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:
Z-Tel Technologies, Inc.
000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of record of any
Rights Certificate or Right 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:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights Certificate or
Right (or, if prior to the Distribution Date, to the holder of certificates
representing Common Shares, Series D Preferred
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Stock or Series E Preferred 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 it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent of the
Company.
Section 27. Supplements and Amendments. Prior to any Person
becoming an Acquiring Person, the Company may and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of the Rights, the Common Shares, the Series D
Preferred Stock or the Series E Preferred Stock. From and after any Person
becoming an Acquiring Person, the Company may and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights in order to (i) cure any ambiguity, (ii) correct or
supplement any provision contained in this Agreement which may be defective or
inconsistent with any other provisions in this Agreement, or (iii) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided, that no such supplement or amendment shall
adversely affect the interests of the holders of Rights (other than any interest
of an Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of the
Common Shares, the Series D Preferred Stock or the Series E Preferred Stock, as
the case may be. Notwithstanding anything contained in this Agreement to the
contrary, this Agreement may not be amended at a time when the Rights are not
redeemable.
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Section 28. Determinations and Actions by the Board. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors of the Company to any liability to the holders of
the Rights.
Section 29. Successors. All of 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 under
this Agreement.
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 holders of record of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares, the Series D Preferred Stock and the
Series E Preferred 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 holders of record of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares, the Series
D Preferred Stock and the Series E Preferred Stock).
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Section 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued under this Agreement shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable
to contracts made and to be performed entirely within such State.
Section 32. 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 33. 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 of
this Agreement.
Section 34. 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, illegal, 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
Attest: Z-TEL TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ D. Xxxxxxx Xxxxx
--------------------------------- --------------------------------
Name: Xxxx X. Xxxxxxx Name: D. Xxxxxxx Xxxxx
Title:Secretary and Treasurer Title: Chairman and Chief
Executive Officer
Attest: AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- --------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title:Assistant Secretary Title:Vice President
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Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES F JUNIOR PARTICIPATING PREFERRED STOCK
of
Z-TEL TECHNOLOGIES, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Z-Tel Technologies, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law on February 19, 2001:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Corporation's Restated Certificate of Incorporation (the "Certificate of
Incorporation") the Board of Directors hereby creates a new series of Preferred
Stock, par value $0.001 per share (the "Junior Preferred Stock"), of the
Corporation and hereby states the designation and number of shares of each such
series, and fixes the relative rights, preferences, and limitations of each such
series as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series F Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 200,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
69
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the
holders of the Common Stock, par value $0.01 per share (the "Common
Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December
in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share
of Junior Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Junior Preferred Stock.
If the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of
shares of Junior Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Junior Preferred Stock as provided in paragraph (A)
of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, if no dividend or distribution
shall have been declared on the Common Stock during the period between
any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record
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70
date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination
of holders of shares of Junior Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Junior Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Junior Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Junior Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters submitted to a vote of the
stockholders of the Corporation. If the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock, then in each such
case the number of votes per share to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Junior Preferred
Stock and the holders of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Junior Preferred Stock shall have no voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
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Section 4. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Junior
Preferred Stock unless, prior thereto, the holders of shares of Junior Preferred
Stock shall have received $1000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of Junior Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred Stock
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. If the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Junior Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 5. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1000 times the aggregate amount of stock, securities, cash
or any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Junior Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 6. Certain Restrictions.
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(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred
Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preferred Stock, except dividends
paid ratably on the Junior Preferred Stock and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Junior Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or any
shares of stock ranking on a parity with the Junior Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 1, purchase or otherwise acquire such
shares at such time and in such manner.
Section 7. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of
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Incorporation, or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 8. No Redemption. The shares of Junior Preferred Stock shall
not be redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation shall not be
amended in any manner which would alter or change the powers, preferences or
special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding Junior Preferred Stock.
Section 11. Fractional Shares. The Junior Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of the Junior Preferred Stock.
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IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its Chairman of the Board and attested by its
Secretary this __ day of February, 2001.
-----------------------------------
Chairman of the Board
Attest:
------------------------------
Secretary
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EXHIBIT B
[Form of Rights Certificate]
Certificate No. R-__ ________ Rights
NOT EXERCISABLE AFTER FEBRUARY 19, 2011 OR
UNDER CERTAIN CIRCUMSTANCES EARLIER. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
IF THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN
ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON OR A
TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY
SUCH PERSONS, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY WILL BECOME
NULL AND VOID.
Rights Certificate
Z-Tel Technologies, Inc.
This certifies that _________________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of February 19, 2001 (the "Rights Agreement") between Z-Tel
Technologies, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., Tampa, Florida time,
on February 19, 2011, at the principal office of the Rights Agent, or its
successors as Rights Agent, one one-thousandth of a fully paid and nonassessable
share of Series F Junior
76
Participating Preferred Stock, $.001 par value per share ("Junior Preferred
Shares"), of the Company at a purchase price of $45 as the same may from time to
time be adjusted in accordance with the Rights Agreement ("Purchase Price"),
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of Junior Preferred Shares which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of March 7, 2001 (the "Record
Date") based on the Junior Preferred Shares of the Company as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the
number of Junior Preferred Shares 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 and, upon the happening of
certain events, securities other than Junior Preferred Shares, or other
property, may be acquired upon exercise of the Rights evidenced by this Rights
Certificate, as provided by 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
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Rights Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company
and the above-mentioned offices of the Rights Agent.
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77
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a like aggregate
number of one one-thousandths of a Junior Preferred Share 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 (i) may be redeemed by the Company at its option at a
redemption price of $.001 per Right or (ii) may be exchanged in whole or in part
for Common Shares of the Company or common stock equivalents.
No fractional Junior Preferred Shares will be issued upon the exercise
of any Rights evidenced hereby (other than, except as set forth above, fractions
that are integral multiples of one one-thousandth of a Junior Preferred Share,
which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof, cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Junior Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or
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78
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.
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79
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal, dated as of ___________________.
ATTEST: Z-TEL TECHNOLOGIES, INC.
By:
------------------------------- ------------------------------
Secretary Name:
Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By
-----------------------------
Authorized signature
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80
[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)
Rights evidenced by 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: ___________ , ____
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and (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 or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person or any transferee of such Persons.
Dated: ____________, ____
----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment 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.
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FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to
Exercise the Rights Certificate.)
To: Z-Tel Technologies, Inc.
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the Junior Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such share(s) be issued in the name:
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 remaining 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: ______________, ____
----------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
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Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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 or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement); and
(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 or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Dated: ______________, _____
----------------------------------
Signature
84
EXHIBIT C
Z-TEL TECHNOLOGIES, INC.
SUMMARY OF RIGHTS TO PURCHASE
JUNIOR PREFERRED SHARES
On February 19, 2001, the Board of Directors (the "Board") of Z-Tel
Technologies, Inc. (the "Company") adopted a Rights Agreement (the "Rights
Agreement") and authorized and declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock, par value
$.01 per share ("Common Share"), of the Company (and a corresponding number of
Rights for each outstanding share of the Company's Series D Convertible
Preferred Stock and Series E Convertible Preferred Stock (collectively, the
"Convertible Preferred Stock") based on the conversion ratios of those
securities). The dividend is payable on March 7, 2001 to the stockholders of
record on that date (the "Record Date"), and with respect to Common Shares and
Convertible Preferred Stock issued thereafter until the Distribution Date (as
hereinafter defined) or the expiration or earlier redemption or exchange of the
Rights. Except as set forth below, each Right entitles the holder of record to
purchase from the Company at any time after the Distribution Date one
one-thousandth of a share of Series F Junior Participating Preferred Stock, par
value $.001 per share (the "Junior Preferred Shares"), at a price of $45 per one
one-thousandth of a share, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in the Rights Agreement.
Initially, the Rights will be attached to all certificates representing
Common Shares and Convertible Preferred Stock then outstanding, and no separate
Rights Certificates will be distributed. The Rights will become exercisable and
separate from the Common Shares and Convertible Preferred Stock upon the earlier
to occur of (i) the public announcement that a Person or group of affiliated or
associated Persons has acquired beneficial ownership of 15% or more of the
voting power of the outstanding Common Shares (such Person or group being
hereinafter referred to as an "Acquiring Person"), or (ii) 10 business days (or
such later date as the Board may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a Person or group becoming the beneficial
owner of 15% or more of the voting power of the outstanding Common Shares (the
earlier of such dates being called the "Distribution Date"). Common Shares
beneficially owned by the Company or any subsidiary of the Company will not be
considered outstanding for purposes of calculating the percentage ownership of
any Person.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with, and only with, the Common Shares and
Convertible Preferred Stock. Until the Distribution Date (or earlier redemption
or expiration), new Common Share and Convertible Preferred Stock certificates
issued after the Record Date upon transfer or new issuance of Common Shares and
Convertible
85
Preferred Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates of Common Shares and
Convertible Preferred Stock outstanding as of the Record Date, even without such
notation, also will constitute the transfer of the Rights associated with the
Common Shares and Convertible Preferred Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Shares and Convertible Preferred Stock as of the close of
business on the Distribution Date, and such separate Rights Certificates alone
will evidence the Rights. The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on February 19, 2011,
unless earlier redeemed by the Company as described below.
Each of the following Persons will not be deemed to be an Acquiring Person even
if they have acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the voting power of the outstanding Common Shares of the Company:
(i) the Company, (ii) any subsidiary of the Company, (iii) any employee benefit
plan of the Company or of any subsidiary of the Company, (iv) any Person who
would otherwise become an Acquiring Person solely by virtue of a reduction in
the number of outstanding Common Shares unless and until such Person shall
become the beneficial owner of any additional Common Shares, and (v) certain
other Persons which beneficially own 15% or more of the outstanding Common
Shares as of the date hereof, subject to certain conditions.
If any Person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive, in lieu of Junior
Preferred Shares and upon payment of the Purchase Price, Common Shares (or in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the Purchase Price of the Right. Notwithstanding the
foregoing, all rights that are, or were, beneficially owned by an Acquiring
Person or any affiliate or associate thereof will be null and void and not
exercisable.
If, at any time on or after a Person become an Acquiring Person, (i)
the Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding Common Shares immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (ii) more than 50% of the Company's assets, cash
flow or earning power is sold or transferred other than in the ordinary course
of the Company's business, then each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, in lieu of Junior Preferred Shares and upon
exercise and payment of the Purchase Price, common shares of the acquiring
company having a value equal to two times the Purchase Price. If a transaction
would otherwise result in a holder's having a Flip-In as well as a Flip-Over
Right, then only the Flip-Over Right will be exercisable; if a transaction
results in a holder's having a Flip-Over Right subsequent to a transaction
resulting in a holder's having a Flip-In Right, a holder will have Flip-Over
Rights only to the extent such holder's Flip-In Rights have not been exercised.
The Purchase Price payable, and the number of Junior Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Junior Preferred Shares, (ii) upon the grant to holders of the Junior
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Preferred Shares of certain rights or warrants to subscribe for Junior Preferred
Shares or convertible securities at less than the current market price of the
Junior Preferred Shares or (iii) upon the distribution to holders of the Junior
Preferred Shares of evidences of indebtedness or assets (excluding dividends
payable in Junior Preferred Shares) or of subscription rights or warrants (other
than those referred to above). However, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%.
The number of outstanding Rights and the number of one one-thousandths
of a Junior Preferred Share issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Shares or a
stock dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Junior Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Junior Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 1000 times the dividend declared per share of Common
Share. In the event of liquidation, the holders of Junior Preferred Shares will
be entitled to a minimum preferential liquidation payment of $1000 per share but
will be entitled to an aggregate payment of 1000 times the payment made per
Common Share. Each Junior Preferred Share will have 1000 votes, in each case
voting together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which the Common Shares are exchanged,
each Junior Preferred Share will be entitled to receive 1000 times the amount
received per Common Share. These rights are protected by customary antidilution
provisions.
Because of the nature of the dividend, liquidation and voting rights of
the Junior Preferred Shares, the value of the one one-thousandth interest in a
Junior Preferred Share purchasable upon exercise of each Right should
approximate the value of one Common Share.
If, after the triggering of Flip-In Rights, insufficient Common Shares
are available for the exercise in full of the Rights, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exercise in full of the Rights. If, after the expiration of 120
days after the triggering of Flip-In Rights, insufficient Common Shares are
available for the exercise in full of the Rights, holders of Rights will receive
upon exercise Common Shares or to the extent available cash, property or other
securities of the Company, in proportions determined by the Company, so that the
aggregate value received is equal to twice the Purchase Price.
The Company is not required to issue fractional Junior Preferred Shares
(other than fractions which are integral multiples of one one-thousandth of a
Junior Preferred Share, which may, at the election of the Company be evidenced
by depositary receipts), and in lieu thereof, a payment in cash will be made to
the holder of such Rights equal to the same fraction of the current value of one
one-thousandth of a Junior Preferred Share. Following the triggering of the
Flip-In Rights, the Company will not be required to issue fractional Common
Shares upon exercise of the Rights and, in lieu thereof, a payment in cash will
be made to the holder of such Rights equal to the same fraction of the current
market value of a Common Share.
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In general, the Company may redeem the Rights at a price of $.001 per
Right (subject to adjustment), at any time before the existence of an Acquiring
Person.
At any time after any Person becomes an Acquiring Person and prior to
the acquisition by any Person of 50% or more of the outstanding Common Shares,
the Board of Directors of the Company may exchange the then outstanding and
exercisable Rights (other than Rights owned by an Acquiring Person, which will
have become null and void), in whole or in part, for Common Shares, each Right
being exchangeable for one Common Share or common share equivalents equal to one
Common Share, subject to adjustment.
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.
The issuance of the Rights is not taxable to the Company or to
stockholders under presently existing federal income tax law, and will not
change the way in which stockholders can presently trade the Company's Common
Shares. If the Rights should become exercisable, stockholders, depending on then
existing circumstances, may recognize taxable income.
Prior to any Person becoming an Acquiring Person, the Rights Agreement
generally may be amended by the Board of Directors of the Company. On or after
the time that a Person becomes an Acquiring Person, the Company may amend the
Rights Agreement only to (i) cure any ambiguity, (ii) correct or supplement any
provision which may be defective or inconsistent with the other provisions of
the Rights Agreement, or (iii) change or supplement the Rights Agreement in any
other manner which the Company may deem necessary or desirable, provided that no
amendment shall adversely affect the interests of the holders of Rights (other
than any interest of an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). However, no amendment may be made at any time when the Rights
are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a Person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being acquired.
Accordingly, the existence of the Rights may deter certain acquirors from making
takeover proposals or tender offers. However, the rights plan helps ensure that
the Company's stockholders receive fair and equal treatment in the event of any
proposed takeover of the Company. The adoption of the plan is not in response to
any specific takeover threat or proposal, but is a precaution taken to protect
the rights of the Company's stockholders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Registration Statement on
Form 8-A with respect to the Rights filed with the Securities and Exchange
Commission (Commission File No. 000-28467). A copy of the Rights Agreement is
available free of charge from the Company, 000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxx, Xxxxxxx 00000, Attention: General Counsel. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated in this
summary description by reference.
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