SHAREHOLDERS RIGHTS AGREEMENT
Exhibit 2.9
This Shareholders Rights Agreement (this “Rights Agreement”) is made and entered into
effective as of January 14, 2009, by and between FreeSeas Inc., a Xxxxxxxx Islands corporation (the
“Company”), and American Stock Transfer & Trust Company, LLC, as rights agent (the
“Rights Agent”).
WHEREAS, the Board of Directors of the Company (the “Board”) has (a) authorized and
declared a dividend of one right (the “Right”) for each share of the Company’s common
stock, par value U.S.$0.001 per share (the “Common Stock”), held of record as of the Close
of Business (as hereinafter defined) on January 23, 2009 (the “Record Date”) and (b) has
further authorized the issuance of one Right in respect of each share of Common Stock that shall
become outstanding (i) at any time between the Record Date and the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date (as such terms are hereinafter defined) or
(ii) upon the exercise or conversion, prior to the earlier of the Redemption Date or the Final
Expiration Date, of any option or other security exercisable for or convertible into shares of
Common Stock, which option or other such security is outstanding on the Distribution Date; and
WHEREAS, each Right represents the right of the holder thereof to purchase one one-thousandths
of a share of Series A Participating Preferred Stock (as such number may hereafter be adjusted
pursuant to the provisions hereof), upon the terms and subject to the conditions set forth herein,
having the rights, preferences and privileges set forth in the Statement of Designation of Series A
Participating Preferred Stock attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein,
the parties hereby agree as follows:
1. Certain Definitions.
“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 shares of Common
Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan or (iv) an Exempted
Person. Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person as the
result of an acquisition of shares of Common Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the shares of Common Stock of the Company then outstanding; provided, however,
that a Person who (a) becomes the Beneficial Owner of 15% or more of the shares of Common Stock of
the Company then outstanding by reason of share purchases by the Company and (b) then after such
share purchases by the Company, becomes the Beneficial Owner of any additional shares of Common
Stock of the Company (other than pursuant to a dividend or distribution paid or made by the Company
on the outstanding shares of Common Stock in shares of Common Stock or pursuant to a split or
subdivision of the outstanding shares of Common Stock) representing 1% or more of
the Common Stock then outstanding, such Person shall be deemed to be an Acquiring Person
unless upon becoming the Beneficial Owner of such additional shares of Common Stock of the Company
such Person does not beneficially own 15% or more of the shares of Common Stock of the Company then
outstanding. Notwithstanding the foregoing, (x) if the Company’s Board of Directors determines in
good faith that a Person who would otherwise be an “Acquiring Person,” as defined herein, has
become such inadvertently (including, without limitation, because (1) such Person was unaware that
it beneficially owned a percentage of the shares of Common Stock that would otherwise cause such
Person to be an “Acquiring Person,” as defined herein, or (2) such Person was aware of the extent
of the shares of Common Stock it beneficially owned but had no actual knowledge of the consequences
of such beneficial ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person would no longer be an
“Acquiring Person,” as defined herein, then such Person shall not be deemed to be or to have become
an “Acquiring Person” for any purposes of this Agreement; and (y) if, as of the date hereof, any
Person is the Beneficial Owner of 15% or more of the shares of Common Stock outstanding, such
Person shall not be or become an “Acquiring Person,” as defined herein, unless and until such time
as such Person shall become the Beneficial Owner of additional shares of Common Stock (other than
pursuant to a dividend or distribution paid or made by the Company on the outstanding shares of
Common Stock in shares of Common Stock or pursuant to a split or subdivision of the outstanding
shares of Common Stock), unless, upon becoming the Beneficial Owner of such additional shares of
Common Stock, such Person is not then the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding.
“Adjustment Fraction” shall have the meaning set forth in Section 11(a)(i) hereof.
“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.
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, for purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder
(or any comparable or successor law or regulation);
(ii) which such Person or any of such Person’s Affiliates or Associates 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 (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public offering of securities),
or upon the exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be deemed pursuant to
this subsection (ii)(A) to be the Beneficial Owner of, or to beneficially own, (1) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted for purchase or
exchange, or (2) securities which a Person or any of such
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Person’s Affiliates or Associates may be deemed to have the right to acquire pursuant to any
merger or other acquisition agreement between the Company and such Person (or one or more of its
Affiliates or Associates) if such agreement has been approved by the Board of Directors of the
Company prior to such Person becoming an Acquiring Person; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, any security under this subsection
(ii)(B) 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 applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding, whether or not in writing (other than
customary agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to subsection (ii)(B) above) or disposing of any securities of
the Company; provided, however, that in no case shall an officer or director of the Company be
deemed (x) the Beneficial Owner of any securities beneficially owned by another officer or director
of the Company solely by reason of actions undertaken by such persons in their capacity as officers
or directors of the Company or (y) the Beneficial Owner of securities held of record by the trustee
of any employee benefit plan of the Company or any Subsidiary of the Company for the benefit of any
employee of the Company or any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the voting of the securities
held in the plan.
“Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in New York are authorized or obligated by law or executive order to close.
“Close of Business” on any given date shall mean 5:00 P.M., New York time, on such
date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York
time, on the next succeeding Business Day.
“Common Stock” shall have the meaning set forth in the preamble. Common Stock when
used with reference to any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned
Person.
“Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii)
hereof.
“Company” shall have the meaning set forth in the preamble, subject to the terms of
Section 13(a)(iii)(c) hereof.
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“Current Per Share Market Price” of any security (a “Security” for purposes of
this definition), for all computations other than those made pursuant to Section 11(a)(iii) hereof,
shall mean the average of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price of any Security on any
date shall be deemed to be the average of the daily closing prices per share of such Security for
the ten (10) consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the Current Per Share Market Price of the Security is
determined during a period following the announcement by the issuer of such Security of (i) a
dividend or distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or reclassification of such
Security, and prior to the expiration of the applicable thirty (30) Trading Day or ten (10) Trading
Day period, after the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities exchange, the last
sale price or, if such last sale price is not reported, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or,
if on any such date the Security is 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 Security
selected by the Board of Directors of the Company. If on any such date no market maker is making a
market in the Security, 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. If the Preferred Shares are not publicly
traded, the Current Per Share Market Price of the Preferred Shares shall be conclusively deemed to
be the Current Per Share Market Price of the shares of Common Stock as determined pursuant to this
definition, as appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof, multiplied by 1000. If the Security is not publicly
held or so listed or traded, Current Per Share Market Price 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.
“Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Distribution Date” shall mean the earlier of (i) the Close of Business on the tenth
day after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by action of the
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Company’s Board of Directors) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan or an Exempted Person) is first published
or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, if, assuming the successful consummation thereof, such Person would be an Acquiring
Person.
“Equivalent Shares” shall mean Preferred Shares and any other class or series of
capital stock of the Company which is entitled to the same rights, privileges and preferences as
the Preferred Shares.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended.
“Exempted Person” shall mean FS Holdings and each member of the Midas Group.
“Exercise Price” shall have the meaning set forth in Section 4(a) hereof.
“Expiration Date” shall mean the earliest to occur of: (i) the Close of Business on
the Final Expiration Date, (ii) the Redemption Date, or (iii) the time at which the Board of
Directors orders the exchange of the Rights as provided in Section 24 hereof.
“Final Expiration Date” shall mean January 23, 2019.
“FS Holdings “ shall mean FS Holdings Limited.
“Midas Group” shall mean The Midas Touch, S.A., Ion X. Xxxxxxxxxx, V Estates, S.A.,
Xxxxxx Xxxxxxxxxx, and Xxxxxxxx Xxxxxxxxxx or entities established for the benefit of Ion X.
Xxxxxxxxxx or members of his family, any other entities wholly owned by Ion X. Xxxxxxxxxx and
members of this family, and each of their respective Affiliates and Associates.
“Nasdaq” shall mean the NASDAQ OMX Group, Inc.
“Person” shall mean any individual, firm, corporation or other entity, and shall
include any successor (by merger or otherwise) of such entity.
“Post-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.
“Preferred Shares” shall mean shares of Series A Participating Preferred Stock,
U.S.$0.001 par value, of the Company.
“Pre-Event Transferee” shall have the meaning set forth in Section 7(e) hereof.
“Principal Party” shall have the meaning set forth in Section 13(b) hereof.
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“Record Date” shall have the meaning set forth in the recitals at the beginning of
this Rights Agreement.
“Redemption Date” shall have the meaning set forth in Section 23(a) hereof.
“Redemption Price” shall have the meaning set forth in Section 23(a) hereof.
“Rights Agent” shall mean American Stock Transfer &Trust Company, LLC, or its
successor or replacement as provided in Sections 19 and 21 hereof.
“Rights Certificate” shall mean a certificate substantially in the form attached
hereto as Exhibit B.
“Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section
11(a)(iii) hereof.
“Section 13 Event” shall mean any event described in clause (i), (ii) or (iii) of
Section 13(a) hereof.
“Section 24(a)(i) Exchange Ratio” shall have the meaning set forth in Section 24(a)(i)
hereof.
“Section 24(a)(ii) Exchange Ratio” shall have the meaning set forth in Section
24(a)(ii) hereof.
“Securities Act” shall mean the U.S. Securities Act of 1933, as amended.
“Shares Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such; provided that, if such Person is determined not to have become an Acquiring Person as
defined herein, then no Shares Acquisition Date shall be deemed to have occurred.
“Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Subsidiary” of any Person shall mean any corporation or other entity of which an
amount of voting securities sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or any corporation or other entity otherwise controlled by such Person.
“Substitution Period” shall have the meaning set forth in Section 11(a)(iii) hereof.
“Summary of Rights” shall mean a summary of this Agreement substantially in the form
attached hereto as Exhibit C.
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“Total Exercise Price” shall have the meaning set forth in Section 4(a) hereof.
“Trading Day” shall mean a day on which the principal national securities exchange on
which a referenced security is listed or admitted to trading is open for the transaction of
business or, if a referenced security is not listed or admitted to trading on any national
securities exchange, a Business Day.
A “Triggering Event” shall be deemed to have occurred upon any Person becoming an
Acquiring Person.
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the shares of Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Sections 3(b) and 3(c) hereof) by the certificates for shares of Common Stock registered in the
names of the holders thereof (which certificates shall also be deemed to be Rights Certificates)
and not by separate Rights Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common Stock. Until the earlier of
the Distribution Date or the Expiration Date, the surrender for transfer of certificates for shares
of Common Stock shall also constitute the surrender for transfer of the Rights associated with the
shares of Common Stock represented thereby. 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, postage-prepaid
mail, to each record holder of shares of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the Company, a Rights
Certificate evidencing one Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11 hereof, then at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As of the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart from any transfer of
shares of Common Stock, and the holders of such Rights Certificates as listed in the records of the
Company or any transfer agent or registrar for the Rights shall be the record holders thereof.
(b) On the Record Date or as soon as practicable thereafter, the Company will send a copy of
the Summary of Rights by first-class, postage-prepaid mail, to each record holder of shares of
Common Stock as of the Close of Business on the Record Date that requests a Summary of the Rights,
at the address of such holder shown on the records of the Company’s
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transfer agent and registrar. With respect to certificates for shares of Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby.
(c) Unless the Board of Directors by resolution adopted at or before the time of the issuance
of any shares of Common Stock specifies to the contrary, Rights shall be issued in respect of all
shares of Common Stock that are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or, in certain circumstances provided in Section 22
hereof, after the Distribution Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A SHAREHOLDERS RIGHTS AGREEMENT BETWEEN FREESEAS INC.
AND AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, AS THE RIGHTS AGENT, DATED
AS OF JANUARY 14, 2009, (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE
HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL EXECUTIVE OFFICES OF FREESEAS 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. FREESEAS INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A
COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES
AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the Rights associated with the shares of Common
Stock represented by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby.
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(d) In the event that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such shares of Common
Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise
any Rights associated with the shares of Common Stock which are no longer outstanding.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase shares of Common Stock and
of assignment to be printed on the reverse thereof) shall be substantially in the form of
Exhibit B hereto and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or a national market system, on which the Rights may from time to time be
listed or included, or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date (or in
the case of Rights issued with respect to shares of Common Stock issued by the Company after the
Record Date, as of the date of issuance of such shares of Common Stock) and on their face shall
entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as
shall be set forth therein at the price set forth therein (such exercise price per one
one-thousandths of a Preferred Share being hereinafter referred to as the “Exercise Price”
and the aggregate Exercise Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter referred to as the “Total Exercise Price”), but the number and type of
securities purchasable upon the exercise of each Right and the Exercise Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Company’s Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT).
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ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, its Chief Operating Officer, its Chief Financial Officer, its President or any Vice
President, either manually or by facsimile signature, and by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature, and shall have affixed thereto
the Company’s seal (if any) or a facsimile thereof. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Rights Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates on behalf of the Company 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 Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purposes, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the
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Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to Sections 7(e), 14
and 24 hereof, countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make 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.
7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
(a) Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date and prior to the Close of Business on the
Expiration Date by surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Exercise Price for each one-thousandth of
a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as the
case may be) as to which the Rights are exercised.
(b) The Exercise Price for each one one-thousandths of a Preferred Share issuable pursuant to
the exercise of a Right shall initially be Eighteen U.S. Dollars (U.S.$18.00), shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by payment of the Exercise Price for the number of
one one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash
or other assets as the case may be) to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights Certificate in accordance with Section 9(e)
hereof, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent for the Preferred Shares) a certificate or certificates for the number of one
one-thousandths of a Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests or (B) if the Company shall have elected to deposit
the total number of one one-thousandths of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets as the case may be) issuable upon exercise of the Rights
hereunder with a depositary agent, requisition
11
from the depositary agent depositary receipts representing such number of one one-thousandths
of a Preferred Share (or, following a Triggering Event, other securities, cash or other assets as
the case may be) as are to be purchased (in which case certificates for the Preferred Shares (or,
following a Triggering Event, other securities, cash or other assets as the case may be)
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 to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be designated by such holder
and (iv) when appropriate, after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Rights Certificate. Subject to Section 24, the payment of the Exercise
Price (as such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and
an amount equal to any applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e) hereof, may be made in cash or by certified bank check,
cashier’s check or bank draft payable to the order of the Company. In the event that the Company is
obligated to issue securities of the Company other than Preferred Shares, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his or her duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Triggering Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such (a
“Post-Event Transferee”), (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Company’s Board of
Directors has determined is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e) (a “Pre-Event Transferee”) or (iv) any
subsequent transferee receiving transferred Rights from a Post-Event Transferee or a Pre-Event
Transferee, either directly or through one or more intermediate transferees, shall become null and
void without any further action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section
4(b) hereof are complied with, but shall have no liability to any holder of Rights Certificates or
to any other Person as a result of its failure to
12
make any determinations with respect to an Acquiring Person or any of such Acquiring Person’s
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall, in addition to having complied with the requirements of Section 7(a), have (i) completed and
signed the certificate contained in the form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such exercise and (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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 Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its best efforts to cause to be reserved
and kept available out of its authorized and unissued Preferred Shares not reserved for another
purpose (and, following the occurrence of a Triggering Event, out of its authorized and unissued
shares of Common Stock and/or other securities), the number of Preferred Shares (and, following the
occurrence of the Triggering Event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred Shares on a national securities
exchange, then so long as the Preferred Shares (and, following the occurrence of a Triggering
Event, shares of Common Stock and/or other securities) issuable and deliverable upon exercise of
the Rights may be listed on such exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable (but only to the extent that it is reasonably
likely that the Rights will be exercised), all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering Event in which the consideration to be
delivered by the Company upon exercise of the Rights is described in Section 11(a)(ii) or Section
11(a)(iii) hereof, or as soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
13
registration statement to become effective as soon as practicable after such filing and (iii)
cause such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the date of expiration of the Rights. The Company
may temporarily suspend, for a period not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement and notify the Rights Agent that the
exercisability of the Rights has been temporarily suspended, as well as a public announcement and
notification to the Rights Agent at such time as the suspension is no longer in effect. The Company
will also take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability of the
Rights. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction, unless the requisite qualification in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available, and until a registration statement has
been declared effective.
(d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares (or other securities of the Company) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such securities (subject to payment
of the Exercise Price), be duly and validly authorized and issued and fully paid and nonassessable
shares.
(e) The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any Preferred Shares (or other securities of
the Company) 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 or depositary receipts for the
Preferred Shares (or other securities of the Company) in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred Shares (or other securities of the
Company) upon the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company’s satisfaction that no such tax is due.
10. Record Date. Each Person in whose name any certificate for a number of one
one-thousandths of a Preferred Share (or other securities of the Company) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of
Preferred Shares (or other securities of the Company) represented thereon, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Total Exercise Price with respect to which the Rights have been
exercised (and any applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the 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 transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
14
Certificate shall not be entitled to any rights of a holder of Preferred Shares (or other
securities of the Company) for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
11. Adjustment of Exercise Price, Number of Shares or Number of Rights. The Exercise
Price, the number and kind of shares or other property covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a) (i) Notwithstanding anything in this Agreement to the contrary, in the event the Company
shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares, or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), then, in each such event, except
as otherwise provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price in effect
at the time of the record date for such dividend or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Exercise Price thereafter shall equal
the result obtained by dividing the Exercise Price in effect immediately prior to such time by a
fraction (the “Adjustment Fraction”), the numerator of which shall be the total number of
Preferred Shares (or shares of capital stock issued in such reclassification of the Preferred
Shares) outstanding immediately following such time and the denominator of which shall be the total
number of Preferred Shares outstanding immediately prior to such time; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of such
Right; and (2) the number of one one-thousandths of a Preferred Share (or share of such other
capital stock) issuable upon the exercise of each Right shall equal the number of one
one-thousandths of a Preferred Share (or share of such other capital stock) as was issuable upon
exercise of a Right immediately prior to the occurrence of the event described in clauses (A)-(D)
of this Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however,
that, no such adjustment shall be made pursuant to this Section 11(a)(i) to the extent that there
shall have simultaneously occurred an event described in clause (A), (B), (C) or (D) of Section
11(n) with a proportionate adjustment being made thereunder. Each share of Common Stock that shall
become outstanding after an adjustment has been made pursuant to this Section 11(a)(i) shall have
associated with it the number of Rights, exercisable at the Exercise Price and for the number of
one one-thousandths of a Preferred Share (or shares of such other capital stock) as one share of
Common Stock has associated with it immediately following the adjustment made pursuant to this
Section 11(a)(i).
(ii) Subject to Section 24 of this Agreement, in the event a Triggering Event shall have
occurred, then promptly following such Triggering Event each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive for each Right, upon exercise
thereof in accordance with the terms of this Agreement and payment of the Exercise Price in effect
immediately prior to the occurrence of the Triggering Event, in
15
lieu of a number of one one-thousandths of a Preferred Share, such number of shares of Common
Stock of the Company as shall equal the result obtained by multiplying the Exercise Price in effect
immediately prior to the occurrence of the Triggering Event by the number of one one-thousandths of
a Preferred Share for which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first occurrence of a Triggering Event,
and dividing that product by 50% of the Current Per Share Market Price for shares of Common Stock
on the date of occurrence of the Triggering Event (the “Adjusted Shares”);
provided, however, that the Exercise Price and the number of shares of Common Stock
of the Company so receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof to reflect any events occurring in respect of
the shares of Common Stock of the Company after the occurrence of the Triggering Event.
(iii) In lieu of issuing shares of Common Stock in accordance with Section 11(a)(ii) hereof,
the Company may, if the Company’s Board of Directors determines that such action is necessary or
appropriate and not contrary to the interest of holders of Rights and, in the event that the number
of shares of Common Stock which are authorized by the Company’s Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights, or if any necessary regulatory
approval for such issuance has not been obtained by the Company, the Company shall: (A) determine
the excess of (1) the value of the shares of Common Stock issuable upon the exercise of a Right
(the “Current Value”) over (2) the Exercise Price (such excess, the “Spread”) and
(B) with respect to each Right, make adequate provision to substitute for such shares of Common
Stock, upon exercise of the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other
equity securities of the Company (including, without limitation, shares or units of shares of any
series of preferred stock which the Company’s Board of Directors has deemed to have the same value
as Common Stock (such shares or units of shares of preferred stock are herein called “Common
Stock Equivalents”)), except to the extent that the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt securities of the Company, except to
the extent that the Company has not obtained any necessary stockholder or regulatory approval for
such issuance, (5) other assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined by the Company’s Board
of Directors based upon the advice of a nationally recognized investment banking firm selected by
the Company’s Board of Directors; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days following the later
of (x) the first occurrence of a Triggering Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being referred to herein as
the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring payment of the Exercise Price, Common
Stock (to the extent available), except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If the Company’s Board of Directors
shall determine in good faith that it is likely that sufficient additional Common Stock could be
authorized for issuance upon exercise in full of the Rights or that any necessary regulatory
approval for such issuance will be obtained, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization of
16
such additional shares or take action to obtain such regulatory approval (such period, as it
may be extended, the “Substitution Period”). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of additional shares, to
take any action to obtain any required regulatory approval 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 the Common Stock shall be the Current Per Share Market Price of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to have
the same value as the Common Stock on such date.
(b) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the issuance of rights, options or warrants to all holders of Preferred Shares entitling such
holders (for a period expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a conversion price per share,
if a security convertible into Preferred Shares or Equivalent Shares) less than the then Current
Per Share Market Price of the Preferred Shares or Equivalent Shares on such record date, then, in
each such case, the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of Preferred Shares or Equivalent Shares, as the
case may be, which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the aggregate initial
conversion price of the convertible securities to be offered or issued) would purchase at such
current market price, and the denominator of which shall be the number of Preferred Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of additional Preferred
Shares or Equivalent Shares, as the case may be, to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Company’s Board of Directors, 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. Preferred Shares and Equivalent 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 record date is fixed, and
in the event that such rights, options or warrants are not so issued, the Exercise Price shall be
adjusted to be the Exercise Price which would then be in effect if such record date had not been
fixed.
17
(c) In case the Company shall, at any time after the date of this Agreement, fix a record date
for the making of a distribution to all holders of the Preferred Shares or of any class or series
of Equivalent 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 or assets (other than a regular quarterly cash dividend, if any, or a dividend payable
in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each such case, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the Current Per Share Market Price of a
Preferred Share or an Equivalent Share on such record date, less the fair market value per
Preferred Share or Equivalent 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) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a Preferred Share or Equivalent Share, as the case
may be, and the denominator of which shall be such Current Per Share Market Price of a Preferred
Share or Equivalent Share on such record date; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price which would have been
in effect if such record date had not been fixed.
(d) Notwithstanding anything to the contrary, no adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments which by reason of this Section 11(d) 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 share of Common Stock or other share or one hundred-thousandth of a
Preferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(d), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which requires such adjustment or (ii) the Expiration Date.
(e) If as a result of an adjustment made pursuant to Section 11(a) or 13(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any shares of capital stock
other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise
of any Right and, if required, the Exercise Price thereof, shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Shares contained in Sections 11(a), 11(b), 11(c), 11(d), 11(g), 11(h), 11(i),
11(j), 11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(f) All Rights originally issued by the Company subsequent to any adjustment made to the
Exercise Price hereunder shall evidence the right to purchase, at the adjusted Exercise Price, the
number of one one-thousandths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
18
(g) Unless the Company shall have exercised its election as provided in Section 11(h), upon
each adjustment of the Exercise Price as a result of the calculations made in Section 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of Preferred Shares
(calculated to the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x) the
number of Preferred Shares covered by a Right immediately prior to this adjustment, by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise Price, and (ii)
dividing the product so obtained by the Exercise Price in effect immediately after such adjustment
of the Exercise Price.
(h) The Company may elect on or after the date of any adjustment of the Exercise Price as a
result of the calculations made in Section 11(b) or (c) to adjust the number of Rights, in
substitution for any adjustment in the number of Preferred Shares purchasable upon the exercise of
a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated to the nearest
one hundred-thousandth) obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which the Exercise Price
is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the
Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Rights Certificates 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 Exercise 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.
(i) Irrespective of any adjustment or change in the Exercise Price or the number of Preferred
Shares issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per one one-thousandth of a Preferred Share and
the number of one one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing the Exercise Price below
the par or stated value, if any, of the number of one one-thousandths of a Preferred Share issuable
upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may
19
validly and legally issue as fully paid and nonassessable shares such number of one
one-thousandths of a Preferred Share at such adjusted Exercise Price.
(k) In any case in which this Section 11 shall require that an adjustment in the Exercise
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date of the number of one one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of one
one-thousandths of a Preferred Share and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise 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) upon the occurrence of the event requiring such adjustment.
(l) Notwithstanding anything in this Section 11 to the contrary, prior to the Distribution
Date, the Company shall be entitled to make such reductions in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Shares or Common Stock, (ii) issuance wholly for cash of any Preferred Shares or
Common Stock at less than the current market price, (iii) issuance wholly for cash of Preferred
Shares or Common Stock or securities which by their terms are convertible into or exchangeable for
Preferred or Common Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares or
Common Stock shall not be taxable to such stockholders.
(m) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) 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.
(n) In the event the Company shall at any time after the date of this Agreement (A) declare a
dividend on the Common Stock payable in shares of Common Stock, (B) subdivide the outstanding
shares of Common Stock, (C) combine the outstanding Common Stock (by reverse stock split or
otherwise) into a smaller number of shares of Common Stock, or (D) issue any shares of its capital
stock in a reclassification of the shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such event, except as otherwise provided in Section 11(a) and Section
7(e) hereof: (1) each share of Common Stock (or shares of capital stock issued in such
reclassification of the Common Stock) outstanding immediately following such time shall have
associated with it the number of Rights as were associated with one share of Common Stock
immediately prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise Price in effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification shall be adjusted so that the Exercise Price
thereafter shall equal the result obtained by multiplying the Exercise Price in effect immediately
prior to such time by a fraction, the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the event described in clauses (A)-(D) above, and the
denominator of which
20
shall be the total number of shares of Common Stock outstanding immediately after such event;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of such Right; and (3) the number of one one-thousandths of a
Preferred Share (or shares of such other capital stock) issuable upon the exercise of each Right
outstanding after such event shall equal the number of one- thousandths of a Preferred Share (or
shares of such other capital stock) as were issuable with respect to one Right immediately prior to
such event. Each share of Common Stock that shall become outstanding after an adjustment has been
made pursuant to this Section 11(n) shall have associated with it the number of Rights, exercisable
at the Exercise Price and for the number of one one-thousandths of a Preferred Share (or shares of
such other capital stock) as one share of Common Stock has associated with it immediately following
the adjustment made pursuant to this Section 11(n). If an event occurs which would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(n) shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever an adjustment
is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the 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 in accordance with Section 26 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or give such notice shall
not affect the validity of such adjustment or the force or effect of the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such certificate and on any
adjustment contained therein and shall not be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following a Triggering Event, directly or indirectly:
(i) the Company shall consolidate with, or merge with and into, any other Person (other than a
wholly owned Subsidiary of the Company in a transaction the principal purpose of which is to change
the jurisdiction of incorporation of the Company and which complies with Section 11(m) hereof);
(ii) any Person shall consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such consolidation or merger and, in
connection with such merger, all or part of the shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person (or the Company); or
(iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its
21
wholly owned Subsidiaries in one or more transactions, each of which individually (and
together) complies with Section 11(m) hereof), then, concurrently with and in each such case:
(A) each holder of a Right (except as provided in Section 7(e) hereof) shall thereafter have
the right to receive, upon the exercise thereof, at a price equal to the Total Exercise Price
applicable immediately prior to the occurrence of the Section 13 Event in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of Common Stock of the Principal Party (as hereinafter defined), free of
any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the
result obtained by dividing such Total Exercise Price by 50% of the Current Per Share Market Price
of the shares of Common Stock of such Principal Party on the date of consummation of such Section
13 Event, provided, however, that the Exercise Price and the number of shares of Common Stock of
such Principal Party so receivable upon exercise of a Right shall be subject to further adjustment
as appropriate in accordance with Section 11(e) hereof;
(B) 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;
(C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;
(D) such Principal Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and
(E) upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or
other extraordinary transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Total Exercise Price
as provided in this Section 13(a), such cash, shares, rights, warrants and other property which
such holder would have been entitled to receive had such holder, at the time of such transaction,
owned the shares of Common Stock of the Principal Party receivable upon the exercise of such Right
pursuant to this Section 13(a), 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.
(F) For purposes hereof, the “earning power” of the Company and its Subsidiaries shall be
determined in good faith by the Company’s Board of Directors on the basis of the operating earnings
of each business operated by the Company and its Subsidiaries during the three fiscal years
preceding the date of such determination (or, in the case of any business not operated by the
Company or any Subsidiary during three full fiscal years
22
preceding such date, during the period such business was operated by the Company or any
Subsidiary).
(b) For purposes of this Agreement, the term “Principal Party” shall mean:
(i) in the case of any transaction described in clause (i) or (ii) of Section 13(a) hereof:
(A) the Person that is the issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one such issuer, the issuer
the shares of Common Stock of which have the greatest aggregate market value of shares outstanding,
or (B) if no securities are so issued, (x) the Person that is the other party to the merger, if
such Person survives said merger, or, if there is more than one such Person, the Person the shares
of Common Stock of which have the greatest aggregate market value of shares outstanding or (y) if
the Person that is the other party to the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives) or (z) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in clause (iii) of Section 13(a) hereof, 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 more than one Person that is a party to such
transaction or transactions receives the same portion of the assets or earning power so transferred
and each such portion would, were it not for the other equal portions, constitute the greatest
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 is the
issuer of shares of Common Stock having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause (b)(i)
or (b)(ii), if the shares of Common Stock of such Person are not at such time or have not been
continuously over the preceding 12-month period registered under Section 12 of the Exchange Act,
then (1) if such Person is a direct or indirect Subsidiary of another Person the shares of Common
Stock of which are and have been so registered, the term “Principal Party” shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of which are and have been so registered, the term “Principal Party” shall
refer to whichever of such Persons is the issuer of shares of Common Stock having the greatest
aggregate market value of shares outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned, directly or
indirectly by the same Person, the rules set forth in clauses (1) and (2) above shall apply to each
of the owners having an interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in each such case shall
bear the obligations set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized shares of Common Stock that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such issuer shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that such Principal Party shall, upon consummation of
such Section 13 Event, assume this Agreement in accordance with Sections 13(a) and 13(b) hereof,
that all rights of first refusal or preemptive rights in respect of
23
the issuance of shares of Common Stock of such Principal Party upon exercise of outstanding
Rights have been waived, that there are no rights, warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the Rights and that
such transaction shall not result in a default by such Principal Party under this Agreement, and
further providing that, as soon as practicable after the date of such Section 13 Event, such
Principal Party will:
(i) prepare and file a registration statement under the Securities Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form, 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 statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until the Expiration
Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange or to meet the
eligibility requirements for quotation on Nasdaq and list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on Nasdaq; and
(iii) deliver to holders of the Rights historical financial statements for such Principal
Party which comply in all respects with the requirements for registration on Form F-1 (or any
successor form) under the Securities Act.
In the event that at any time after the occurrence of a Triggering Event some or all of the
Rights shall not have been exercised at the time of a transaction described in this Section 13, the
Rights which have not theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).
(d) In case the “Principal Party” for purposes of Section 13(b) hereof has provision in any of
its authorized securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to Section 13 hereof), in
connection with, or as a consequence of, the consummation of a Section 13 Event, shares of Common
Stock or Equivalent Shares of such Principal Party at less than the then Current Per Share Market
Price thereof or securities exercisable for, or convertible into, shares of Common Stock or
Equivalent Shares of such Principal Party at less than such then Current Per Share Market Price, or
(ii) providing for any special payment, tax or similar provision in connection with the issuance of
the shares of Common Stock of such Principal Party pursuant to the provisions of Section 13 hereof,
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.
24
(e) The Company covenants and agrees that it shall not, at any time after the Distribution
Date, effect or permit to occur any Section 13 Event, if (i) at the time or immediately after such
Section 13 Event 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, (ii) prior to, simultaneously with or immediately after such
Section 13 Event, the stockholders of the Person who constitutes, or would constitute, the
“Principal Party” for purposes of Section 13(b) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the exercisability of the Rights.
(f) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable, as determined pursuant to
this Agreement.
(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-thousandth of a 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 Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of
one one-thousandth of a Preferred Share, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share shall be one thousand times the
closing price of a share of Common Stock (as determined pursuant to the terms hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock upon the exercise or
exchange of Rights. In lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market
25
value of a share of Common Stock. For purposes of this Section 14(c), the current market value
of a share of Common Stock shall be the closing price of a share of Common Stock (as determined
pursuant to the terms hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share) upon exercise of a Right.
15. Rights of Action. All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the shares of Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the shares of Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, of the
shares of Common Stock), may, in his or her own behalf and for his or her own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his or her right to exercise the Rights evidenced by such Rights
Certificate 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 will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of any Person subject
to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the shares of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed; and
(c) subject to Sections 6(a) and 7(f) hereof, 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 Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates
or the associated Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary.
17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose to be
26
the holder of the Preferred Shares or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions hereof.
18. The Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any claim of liability in
the premises. In no event will the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the Rights Agent has been advised of
the possibility of such loss or damage.
(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 or certificate for the Preferred Shares or shares of Common
Stock or for other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or
other paper or document reasonably believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
19. Merger or Consolidation or Change of Name of Rights Agent. 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 business of the Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or
27
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. In case at any
time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in all such cases such
Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the written advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such written advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of Current Per Share Market Price) be proved or
established by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer,
the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
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 hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in Sections 3, 11, 13, 23
or 24, or the ascertaining of the existence of facts that would require any such change or
28
adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt by the Rights Agent of a certificate furnished pursuant to Section 12 describing such
change or adjustment); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred Shares 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 Chief Financial Officer, 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 any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such application (which date
shall not be less than five (5) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in writing to an earlier
date) unless, prior to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any 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 Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing
29
that repayment of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has either not been completed 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.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon thirty (30) days’ written notice mailed
to the Company and to each transfer agent of the Preferred Shares and the Common Stock 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 upon thirty (30) days’
written notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Preferred Shares and the Common Stock 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. If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after receiving written notice 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 or her Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United States, in good
standing, which is authorized under such laws to exercise corporate trust or stockholder services
powers and is subject to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus of at least U.S. $100
million. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Preferred Shares and the Common Stock, and mail a written
notice thereof to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of shares of
30
Common Stock following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company outstanding at the date hereof or upon
the exercise, conversion or exchange of securities hereinafter issued by the Company and (b) may,
in any other case, if deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights Certificate shall be
issued and this sentence shall be null and void ab initio if, and to the extent that, such issuance
or this sentence would create a significant risk of or result in material adverse tax consequences
to the Company or the Person to whom such Rights Certificate would be issued or would create a
significant risk of or result in such options’ or employee plans’ or arrangements’ failing to
qualify for otherwise available special tax treatment and (ii) 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.
23. Redemption.
(a) The Company may, at its option and with the approval of the Board of Directors, at any
time prior to the Close of Business on the earlier of (i) the close of business on the tenth day
following the Shares Acquisition Date and (ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of U.S. $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being herein referred to as the “Redemption Price”) and the
Company may, at its option, pay the Redemption Price either in shares of Common Stock (based on the
Current Per Share Market Price thereof at the time of redemption) or cash. Such redemption of the
Rights by the Company may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish. The date on which the Board of
Directors elects to make the redemption effective shall be referred to as the “Redemption
Date.”
(b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided ,
however , that the failure to give or any defect in, any such notice shall not affect the
validity of such redemption. Within ten (10) days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in any manner
31
other than that specifically set forth in this Section 23 or in Section 24 hereof, and other
than in connection with the purchase of shares of Common Stock prior to the Distribution Date.
24. Exchange.
(a) (i) Subject to applicable laws, rules and regulations, and subject to
subsection 24(c) below, the Company may, at its option, by action of the Board of Directors, at any
time after the occurrence of a Triggering Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as
the “Section 24(a)(i) Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the terms of any such plan or an
Exempted Person), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(ii) The Company may, at its option, at any time after any Person becomes an Acquiring Person,
upon resolution adopted by a majority of the Company’s Board of Directors, exchange all or part of
the then-outstanding and exercisable Rights (which shall not include Rights that have become void
pursuant to Section 7(e) hereof) for Preferred Shares at an exchange ratio specified in the
following sentence, as appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof. Subject to such adjustment, each Right may be
exchanged for that number of Preferred Shares obtained by dividing the Adjustment Spread (as
defined below) by the then Current Per Share Market Price (as determined for purposes of the
calculations under Section 11(a)(iii)) per Preferred Share on the earlier of (i) the date on which
any Person becomes an Acquiring Person and (ii) the date on which a tender or exchange offer by any
Person (other than an Exempt Person, the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity) is first published or sent or given within the
meaning of Rule 14d-4(a) of the Exchange Act or any successor rule, if upon consummation thereof
such Person would be the Beneficial Owner of 15% or more of the shares of the Company’s Common
Stock then outstanding (such exchange ratio being the “Section 24(a)(ii) Exchange Ratio”).
The “Adjustment Spread” shall equal (x) the aggregate market price on the date of such
event of the number of Adjustment Shares determined pursuant to Section 11(a)(ii) hereof, minus (y)
the Purchase Price. Notwithstanding the foregoing, the Company may not effect such exchange at any
time after any Person (other than an Exempt Person, the Company, any Subsidiary of the Company, any
employee benefit plan maintained by the Company or any of its Subsidiaries, or any trustee or
fiduciary with respect to such plan acting in such capacity), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the shares of the
Company’s Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to Section 24(a) and without any further action and without any
32
notice, the right to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock or Preferred
Shares, as the case may be, equal to the number of such Rights held by such holder multiplied by
the Section 24(a)(i) Exchange Ratio or Section 24(a)(ii) Exchange Ratio, as the case may be. The
Company shall 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
mail a notice of any such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of Rights which will
be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Company shall either take such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the Rights or
alternatively, at the option of a majority of the Board of Directors, with respect to each Right
(i) pay cash in an amount equal to the Current Value (as hereinafter defined), in lieu of issuing
shares of Common Stock in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of issuing shares of Common
Stock in exchange for each such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by majority vote of the Board of Directors,
or (iii) deliver any combination of cash, property, shares of Common Stock and/or other securities
having a value equal to the Current Value in exchange for each Right. For purposes of this
Section 24(c) only, the Current Value shall mean the product of the Current Per Share Market Price
of shares of Common Stock on the date of the occurrence of the event described above in
subparagraph (a), multiplied by the number of shares of Common Stock for which the Right otherwise
would be exchangeable if there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii) of this
Section 24(c), the Board of Directors may temporarily suspend the exercisability of the Rights for
a period of up to sixty (60) days following the date on which the event described in
Section 24(a) shall have occurred, in order to seek any authorization of additional shares of
Common Stock and/or to decide the appropriate form of distribution to be made pursuant to the above
provision 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.
(d) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock (as determined pursuant to the terms hereof).
33
(e) The Company may, at its option, by majority vote of the Board of Directors, at any time
before any Person has become an Acquiring Person, exchange all or part of the then outstanding
Rights for rights of substantially equivalent value, as determined reasonably and with good faith
by the Board of Directors, based upon the advice of one or more nationally recognized investment
banking firms.
(f) Immediately upon the action of the Board of Directors ordering the exchange of any Rights
pursuant to subsection 24(e) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection 24(e) above. The Company shall
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 mail a notice of
any such exchange to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the transfer agent for the shares of Common Stock of the Company. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which the exchange of
the Rights will be effected.
25. Notice of Certain Events.
(a) In case the Company shall propose to effect or permit to occur any Triggering Event or
Section 13 Event, the Company shall give notice thereof to each holder of Rights in accordance with
Section 26 hereof at least twenty (20) days prior to occurrence of such Triggering Event or such
Section 13 Event.
(b) In case any Triggering Event or Section 13 Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.
26. Notices. Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
| FreeSeas Inc. | ||
| 89 Akti Miaouli & 0 Xxxxxxxxxxxxx Xxxxxx | ||
| 000 00 Xxxxxxx, Xxxxxx | ||
| Attention: Chief Executive Officer | ||
with a copy to:
|
Broad and Xxxxxx | |
| Attn: A. Xxxxxx Xxxxxxxx, Esq. | ||
| 0 Xxxxx Xxxxxxxx Xxxxxxxxx | ||
| 00xx Xxxxx | ||
| Xxxxx, Xxxxxxx 00000 |
34
Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company, LLC
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
27. Supplements and Amendments. Prior to the occurrence of a Distribution Date, the
Company may supplement or amend this Agreement in any respect without the approval of any holders
of Rights and the Rights Agent shall, if the Company so directs, execute such supplement or
amendment. From and after the occurrence of a Distribution Date, the Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of any holders of
Rights in order to (i) cure any ambiguity or omission, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder or (iv) to change or supplement the provisions
hereunder in any manner that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights (other than 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 that 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 shares of Common Stock.
28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
29. Determinations and Actions by the Board of Directors, etc. For all purposes of
this Agreement, any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
35
specifically granted to the Board, or 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 the 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 Certificates and all other
parties and (y) not subject the Board to any liability to the holders of the Rights.
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the shares of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the shares of Common Stock).
31. Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the Close of Business on the tenth day following the date
of such determination by the Board of Directors.
32. Governing Law. This Agreement and each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the Republic of the Xxxxxxxx
Islands and for all purposes shall be governed by and construed in accordance with the laws of such
jurisdiction applicable to contracts to be made and performed entirely within such jurisdiction.
33. Jurisdiction and Venue. Jurisdiction for any action or proceeding arising from or
relating to this Rights Agreement shall be in the courts in the Republic of the Xxxxxxxx Islands.
Each of the parties hereby waives any objection it may have that any such court constitutes an
inconvenient venue.
34. 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.
35. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
36
IN WITNESS WHEREOF, the parties have executed this Shareholders Rights Agreement effective as
of the date first written above.
| FREESEAS INC. |
||||
| By: | /s/ Ion X. Xxxxxxxxxx | |||
| Name: | Ion X. Xxxxxxxxxx | |||
| Title: | Chief Executive Officer | |||
| AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
37
Exhibit A
STATEMENT OF DESIGNATION OF RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK OF FREESEAS INC.
SERIES A PARTICIPATING PREFERRED STOCK OF FREESEAS INC.
The undersigned, Ion X. Xxxxxxxxxx and Xxxxxx Xxxxxxxxxx, do hereby certify:
1. That they are the duly elected and acting President and Secretary, respectively, of
FreeSeas Inc., a Xxxxxxxx Islands corporation (the “Company”).
2. That pursuant to the authority conferred by the Company’s Amended and Restated Articles
of Incorporation, the Company’s Board of Directors on , 2008 adopted the following
resolutions designating and prescribing the relative rights, preferences and limitations of the
Company’s Series A Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors (the
“Board”) of the Company by the Amended and Restated Articles of Incorporation, the Board
hereby establishes a series of preferred stock, par value U.S. $0.001 per share, and fixes the
designation and certain powers, preferences and other special rights of the shares of such series,
and certain qualifications, limitations and restrictions thereon, as follows:
“Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Participating Preferred Stock.” The Series A Participating Preferred Stock shall
have a par value of U.S. $0.001 per share, and the number of shares constituting such series shall
initially be Five Hundred Thousand (500,000), which number the Board may from time to time increase
or decrease (but not below the number then outstanding).
Section 2. Proportional Adjustment. In the event the Company shall at any time after
the issuance of any share or shares of Series A Participating Preferred Stock (i) declare any
dividend on the common stock of the Company, par value U.S. $0.001 per share (the “Common
Stock”), payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case
the Company shall simultaneously effect a proportional adjustment to the number of outstanding
shares of Series A Participating Preferred Stock.
Section 3. Dividends and Distributions.
(a) Subject to the prior and superior right of the holders of any shares of any series of
preferred stock ranking prior and superior to the shares of Series A Participating Preferred Stock
with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be
entitled to receive when, as and if declared by the Board out of funds legally available for the
purpose, quarterly dividends payable in cash on the last 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 Series A Participating Preferred Stock, in an amount
A-1
per share (rounded to the nearest cent) equal to 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 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 Series A Participating Preferred Stock.
(b) The Company shall declare a dividend or distribution on the Series A Participating
Preferred Stock as provided in paragraph (a) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue on outstanding shares of Series A Participating Preferred
Stock from the Quarterly Dividend Payment Date immediately preceding the date of issue of such
shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior
to the record 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 Series A Participating 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 from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Participating 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 may fix a record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed for the payment
thereof.
Section 4. Voting Rights. The holders of shares of Series A Participating Preferred
Stock shall have the following voting rights:
(a) Each share of Series A Participating Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the stockholders of the Company.
(b) Except as otherwise provided herein or required by law, the holders of shares of Series A
Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the Company.
(c) Except as otherwise provided herein or required by law, holders of Series A Participating
Preferred Stock shall have no special 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.
A-2
Section 5. Certain Restrictions.
(a) The Company shall not declare any dividend on, make any distribution on, or redeem or
purchase or otherwise acquire for consideration any shares of Common Stock after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock unless concurrently
therewith it shall declare a dividend on, make a distribution on, or redeem or purchase or
otherwise acquire for consideration the Series A Participating Preferred Stock as required by
Section 3 hereof.
(b) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Participating Preferred Stock as provided in Section 3 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on, make any other distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up) with Series A
Participating Preferred Stock, except dividends paid ratably on the Series A Participating
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 on a
parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any stock of the
Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration
any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity
with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board) to all holders of such shares upon such
terms as the Board, 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.
(c) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company could, under
paragraph (a) of this Section 5, purchase or otherwise acquire such shares at such time and in such
manner.
Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock
purchased or otherwise acquired by the Company 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 to be created by resolution or resolutions of the Board, subject to the
conditions and restrictions on issuance set forth herein and, in the Articles of Incorporation, as
then amended.
A-3
Section 7. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
or winding up of the Company, the holders of shares of Series A Participating Preferred Stock shall
be entitled to receive an aggregate amount per share equal to 1,000 times the aggregate amount to
be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued
and unpaid dividends on such shares of Series A Participating Preferred Stock.
Section 8. Consolidation, Merger, etc. In case the Company 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 and/or any other property, then in
any such case the shares of Series A Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to 1,000 times the aggregate amount of
stock, securities, cash and/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.
Section 9. No Redemption. The shares of Series A Participating Preferred Stock shall
not be redeemable.
Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to
all other series of the Company’s preferred stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide otherwise.
Section 11. Amendment. The Articles of Incorporation of the Company shall not be
further amended in any manner that would materially alter or change the powers, preference or
special rights of the Series A Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority of the outstanding shares of Series A
Participating Preferred Stock, voting separately as a class.
Section 12. Fractional Shares. Series A Participating 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 Series A Participating Preferred Stock.”
RESOLVED FURTHER, that the Board hereby authorizes and directs the President or any Vice
President and the Secretary or any Assistant Secretary of this Company to prepare and file a
Statement of Designation of Rights, Preferences and Privileges in accordance with the foregoing
resolution and the provisions of Xxxxxxxx Islands law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution.
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A-4
We further declare, under penalty of perjury, that the foregoing Statement of Designation is
the act and deed of the Company and that the facts stated therein are true and correct.
Executed on the ___day of
, 2008.
| President | ||
| Secretary |
A-5
Exhibit B
[FORM OF RIGHTS CERTIFICATE]
B-1
Exhibit C
[SUMMARY OF RIGHTS]
C-1
