Exhibit 1
--------------------------------------------------------------------------------
RIGHTS AGREEMENT
between
PFSWEB, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Dated: As of June 8, 2000
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RIGHTS AGREEMENT
Rights Agreement, dated as of June 8, 2000 (the "Agreement"), between
PFSWeb, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent", which term shall include any successor Rights Agent hereunder).
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding at the Close of Business (as
hereinafter defined) on July 6, 2000 (the "Record Date"), each Right
representing the right to purchase one one-thousandth (1/1000) of a share of
Series A Preferred Stock, par value $1.00 per share, of the Company ("Series A
Preferred Stock") having the rights and preferences set forth in the Certificate
of Designations of Preferred Stock with respect to the Series A Preferred Stock,
a copy of which is attached hereto as Exhibit A. The Board of Directors of the
Company has further authorized the issuance of one Right with respect to each
Common Share (as hereinafter defined) that shall become outstanding (whether
originally issued or delivered from the Company's treasury) after the Record
Date and on or prior to the earliest of the Separation Date, the Redemption Date
and the Final Expiration Date (each as hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who, together with all
Affiliates and Associates of such Person, shall hereafter become the Beneficial
Owner of 15% or more of the Common Shares then outstanding, but shall not
include (i) the Company, (ii) any wholly owned Subsidiary of the Company and
(iii) any employee benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the terms of any such
plan or for purposes of funding or providing Common Shares to any such plan;
provided, however, that any Person, who, together with all Affiliates and
Associates of such Person, on the date of this Agreement is the Beneficial Owner
of 15% or more of the outstanding Common Shares shall not be, or be deemed to
be, an "Acquiring Person" unless and until such Person becomes the Beneficial
Owner of an additional one percent (1%) or more of the outstanding Common
Shares. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as a result of an acquisition of Common Shares 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 Common
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Shares of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after share purchases by the Company, acquire any additional Common
Shares of the Company, then such Person shall be deemed to be an "Acquiring
Person." Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provision, has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions, then such Person shall
not be deemed to be an "Acquiring Person" for any purposes of this Agreement.
Notwithstanding the foregoing, Daisytek International Corporation, a Delaware
corporation ("Daisytek"), shall not be an "Acquiring Person" by virtue of its
ownership of capital stock of the Company at any time on or prior to the
distribution by Daisytek to its stockholders of Common Shares of the Company
(the "Spin-Off"), which is scheduled to occur on the Record Date, and no Person
who receives Common Shares of the Company in the Spin-Off shall be an "Acquiring
Person" as a result of such Spin-Off, if, immediately prior to the Spin-Off,
such Person is not deemed an "Acquiring Person" under the Rights Agreement
between Daisytek and the Rights Agent that is in effect on the Record Date.
(b) "Adverse Person" shall mean any Person declared to be an Adverse
Person by a majority of the Board upon determination that the criteria set forth
in Section 11(a)(ii)(B) apply to such person.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations (the
"Rules") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the Record Date.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) that such Person or any of such Person's Affiliates or Associates,
directly or indirectly, now or hereafter owns or has (or by agreement with
the Company is, on the date of this Agreement, entitled to receive) the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed to be the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; and
provided further, that a Person shall not be deemed to be the Beneficial
Owner of, or to beneficially own, securities that such Person has the right
to acquire (whether such right is exercisable immediately
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or only after the passage of time) upon the exercise of (a) employee stock
options now or hereafter (but prior to the Separation Date) issued by the
Company, or (b) conversion rights conferred in any class or series of
Preferred Stock of the Company issued prior to the Separation Date if the
resolutions of the Board providing for the issuance of such class or series
of Preferred Stock shall specifically refer to this Agreement and provide
that the right to acquire securities upon the exercise of conversion rights
so conferred shall not be deemed to constitute beneficial ownership of such
securities;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote (except as
hereinafter provided) or dispose of, or of which any of them, directly or
indirectly, has "beneficial ownership" (as determined pursuant to Rule
13d-3 of the Rules, as in effect on the Record Date) (including, except as
hereinafter provided, pursuant to any agreement, arrangement or
understanding, whether or not in writing); provided, however, that a Person
shall not be deemed to be the Beneficial Owner of, or to beneficially own,
any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Rules and is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report);
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose
of, or with respect to, acquiring, holding, voting (except as described in
the proviso to subparagraph (ii) of this paragraph (d)) or disposing of any
voting securities of the Company; and
(iv) that are, pursuant to the foregoing subparagraphs of this
paragraph (d), or otherwise, deemed to be owned by a voting trust, voting
agent, recipient of a proxy that is not immediately revocable (a
"Non-revocable Proxy") or any other Person to whom such Person (the
"Grantor Person") has contributed, conveyed, delegated, given, granted,
tendered, transferred or otherwise assigned or conferred (collectively,
"given") some or all of the voting rights attributable to the Common Shares
of which the Grantor Person (alone or
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in conjunction with any other Person) is also deemed to be a Beneficial
Owner. Solely for purposes of this Agreement, the Grantor Person shall be
deemed to be the Beneficial Owner of all Common Shares that such voting
trust, voting Agent, proxy holder or other Person has the right, by Non-
revocable Proxy, agreement, assignment, tender, grant or otherwise, to
exercise some or all of the voting rights attributable thereto, whether or
not the Grantor Person shall have contributed or given voting rights that
constitute all or less (even substantially less) than all of the voting
rights held by the voting trust, voting Agent, proxy holder or other Person
to whom or to which the Grantor Person has given some or all of the voting
rights attributable to Common Shares otherwise beneficially owned by the
Grantor Person;
provided, however, that nothing in this paragraph (d) shall cause a person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of or to "beneficially own" any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(e) "Board" means the Board of Directors of the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., 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.
(h) "Common Shares" when used with reference to the Company shall mean
shares of Common Stock, par value $0.001 per share, of the Company. "Common
Shares" or "common shares," when used with reference to any Person other than
the Company, shall mean the capital stock of such Person with the greatest
voting power or the equity securities or other equity interest having power to
control or direct the management of such Person.
(i) "Person" shall mean any individual, firm, corporation, partnership,
association, trust, joint venture, unincorporated organization, limited
liability company or other person or entity and shall include any successor (by
merger or otherwise) of such person or entity.
(j) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii).
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(k) "Section 13(a) Event" shall mean any event described in clause (x)
or (y) or (z) of Section 13(a).
(l) "Series A Preferred Shares" shall mean shares of Series A Preferred
Stock, par value $1.00 a share, of the Company, including any authorized
fraction of a Series A Preferred Shares, unless the context otherwise requires.
(m) "Shares Acquisition Date" shall mean the first date of public
announcement (including, without limitation, a report filed pursuant to Section
13(d) or 14(d) under the Exchange Act) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
(n) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting securities or voting interests is owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.
(o) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13(a) Event.
The following additional terms have the meanings indicated in the
specified Sections of this Agreement set forth below:
(i) "Act" -- Section 9(c).
(ii) "Adjustment Shares" -- Section 11(a)(ii).
(iii) "Common Share equivalent" -- Section 11(a)(iii).
(iv) "Current Value" -- Section 11(a)(iii).
(v) "equivalent shares" -- Section 11(b).
(vi) "Exchange Act" -- Section 1(c).
(vii) "Final Expiration Date" -- Section 7(a).
(viii) "Grantor Person" -- Section 1(d)(iv).
(ix) "Non-Revocable Proxy" -- Section 1(d)(iv)
(x) "Principal Party" -- Section 13(b).
(xi) "Purchase Price" -- Sections 4(a), 11(a)(ii) and 13(a).
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(xii) "Record Date" -- Preamble.
(xiii) "Redemption Date" -- Section 7(a).
(xiv) "Redemption Price" -- Section 23(a).
(xv) "Rules" -- Section 1(c).
(xvi) "Separation Date" -- Section 3(a).
(xvii) "Series A Preferred Stock" -- Preamble.
(xviii) "Spread" -- Section 11(a)(iii).
(xix) "Substitution Period" -- Section 11(a)(iii).
(xx) "Summary of Rights" -- Section 3(b).
(xxi) "Trading Day" -- Section 11(d)(i).
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
agrees to act as Rights Agent under this Agreement. The Company may from time to
time appoint such co-rights agents as it may deem necessary or desirable. The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth
Business Day following the Shares Acquisition Date or (ii) the Close of Business
on the fifteenth (15th) Business Day (or such later date as may be determined by
action of the Board prior to the time as any Person becomes an Acquiring Person)
after the date on which 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) is first commenced within the meaning of Rule 14d-2(a) of the Rules, if
upon consummation thereof, such Person would be the Beneficial Owner of 15% or
more of the Common Shares then outstanding (the earlier of (i) and (ii) being
herein referred to as the "Separation Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders
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thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. The Company must promptly notify the Rights Agent in writing and request
the transfer agent to provide a shareholders list. As soon as practicable after
the Rights Agent receives such written notice and shareholders list, the Rights
Agent will send, by first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Separation Date, at
the address of such holder shown on the records of the Company, one or more
Right Certificates, in substantially the form of Exhibit B hereto, evidencing
one Right for each Common Share so held. In the event that an adjustment in the
number of Rights per Common Share has been made pursuant to Section 11(p)
hereof, at the time of distribution of the Right Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Right Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As
of and after the Separation Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Series A Preferred Stock, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Separation Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof,
together with a copy of the Summary of Rights attached thereto, and the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the earliest of the Separation Date, the Redemption
Date or the Final Expiration Date, the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares issued after the Record Date but
prior to the earliest of the Separation Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES
THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET
FORTH IN A RIGHTS AGREEMENT BETWEEN PFSWEB,
INC. AND CHASEMELLON SHAREHOLDERS SERVICES,
L.L.C. DATED AS OF
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JUNE 8, 2000 (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 PFSWEB,
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.
PFSWEB, INC. WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE RIGHTS AGREEMENT
WITHOUT CHARGE PROMPTLY FOLLOWING 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.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Series A Preferred Shares, exercise notice and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate, which do not
affect the rights, duties or responsibilities of the Rights Agent and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Right Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one one-thousandth of a
share of Series A Preferred Stock as shall be set forth therein at the price per
one one-thousandth of a Series A Preferred Share set forth therein (the
"Purchase Price"), but the amount and type of the securities purchasable (or
other consideration to be made available) upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
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(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents 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 such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board has determined is part of a plan, agreement, arrangement or
understanding that has as a primary purpose or effect avoidance of
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Section 7(e) hereof, and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board or its President, Chief Executive Officer or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal, attested by the Secretary, the Treasurer or
any Assistant Secretary or Assistant Treasurer of the Company, or shall bear a
facsimile thereof. The Right Certificates shall not be valid for any purpose
unless countersigned by the Rights Agent. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, 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 Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the
Company to sign such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
(b) Following the Separation Date and receipt by the Rights Agent of
the written notice and list of record holders of Rights referred to in Section
3(a), the Rights Agent will keep or cause to be kept, at its office designated
pursuant to Section 26 hereof or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued or to be issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates, the certificate number of each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the Close of Business on the Separation Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
Series A Preferred Shares (or, following a Section 11(a)(ii) Event or Section
13(a) Event, Common Shares, other securities or property, as the case may be) as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated, pursuant to Section 26, 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 Right
Certificate until the registered holder shall have properly completed and signed
the certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the person entitled
thereto a Right Certificate or Right 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 Right Certificates. The Rights Agent shall
have no duty or obligation under this section 6 or under any provision of this
Agreement which requires the payment of taxes or governmental charges unless and
until it is satisfied that all such taxes and/or governmental charges have been
paid in full.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security 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 Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Separation Date upon
surrender of the Right 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, pursuant to Section 26 hereof, for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a
Series A Preferred Share as to which the Rights are exercised, at or prior to
the Close of Business on the earlier of (i) July 6, 2010 (the "Final Expiration
Date"), (ii) the date on which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date") or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a Series A
Preferred Share pursuant to the exercise of a Right shall initially be $67,
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 Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Series A Preferred Shares (or other
shares, securities or property, as the case may be) to be purchased and an
amount equal to any applicable tax or governmental charge required to be paid by
the holder of such Right Certificate in accordance with Section 9 hereof, in
cash, or by certified check or cashier's check payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the Series A
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the number of Series A Preferred Shares (or
fractions thereof) 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
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elected to deposit the Series A Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandth of a Series A
Preferred Share as are to be purchased (in which case certificates for the
Series A Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) if and when necessary to
comply with this Agreement, 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) promptly 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 Right Certificate, registered in such name or names as may be
designated by such holder and (iv) after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities (including Common
Shares) or assets pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities or assets are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of a Triggering Event, any Rights beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee from an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board has determined is part of a plan,
agreement, arrangement or understanding that has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action, and any holder of such Rights shall thereupon have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall notify the Rights Agent when this
Section 7(e) applies and shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
neither the Company nor the Rights Agent shall have any liability to any holder
of Right Certificates or other
13
Person as a result of the Company's failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
properly completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Right 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 or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Series A Preferred Shares;
Registration.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Series A Preferred Shares
the number of Series A Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights. Prior to the occurrence of a
Triggering Event, the Company shall not be obliged to cause to be reserved and
kept available out of its authorized and unissued Common Shares or shares of
preferred stock (other than Series A Preferred Shares), any such Common Shares
or any shares of preferred stock (other than the Series A Preferred Shares) to
permit exercise of outstanding Rights.
(b) If the Series A Preferred Shares issuable upon the exercise of
Rights are listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
14
(c) If then required by applicable law, the Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date after
the occurrence of a Triggering Event as to which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement, or as soon as is required by law following the
Separation Date, as the case may be, a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing and (iii)
cause such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities and (B) the
Final Expiration Date. If then required by applicable law, the Company will also
take such action as may be appropriate under the securities or "blue sky" laws
of the various states. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) days after the date set forth in clause (i) of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement. Upon any such suspension, the Company shall promptly
notify the Rights Agent thereof and shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement (with prompt notice thereof to the Rights Agent) at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may, by issuing a public announcement, temporarily suspend the
right to exercise the Rights until such time as a registration statement has
been declared effective. The Company shall notify the Rights Agent whenever it
makes a public announcement pursuant to this Section 9(c) and provide the Rights
Agent with a copy of such announcement. 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.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Series A Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company covenants and agrees that it will pay when due and
payable any and all taxes and governmental charges that may be payable in
respect of the issuance or delivery of the Right Certificates or of any Series A
Preferred Shares (or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any tax or charge that may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates for the Series A Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a
15
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for Series A Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is due.
Section 10. Series A Preferred Shares Record Date. Each Person in whose
name any certificate for Series A Preferred Shares (or Common Shares and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Series A Preferred Shares (or Common Shares and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes and governmental
charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Series A Preferred Shares (or Common Shares
and/or other securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Series A Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled (in such holder's capacity as such) to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote any shares, to
receive dividends or other distributions with respect to any shares or to
exercise any preemptive rights with respect to any shares, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right, and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Series A Preferred Shares
payable in Series A Preferred Shares, (B) subdivide the outstanding Series A
Preferred Shares, (C) combine the outstanding Series A Preferred Shares into a
smaller number of Series A Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Series A Preferred Shares (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and
16 Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock that, if such Right had been exercised
immediately prior to such date and at a time when the Series A Preferred Shares
transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.
(ii) Subject to Section 24, in the event that
(A) any Person becomes an Acquiring Person;
or
(B) a majority of the Board shall declare any Person to be an Adverse
Person, upon a determination that such Person, alone or together with its
Affiliates and Associates, has become the Beneficial Owner of an amount of
Common Shares which a majority of the Board determines to be substantial
(which amount shall in no event be less than 10% of the Common Shares then
outstanding) and a determination by a majority of the Board after
reasonable inquiry and investigation, including consultation with such
Person as such directors shall deem appropriate, that (a) such Beneficial
ownership by such Person is intended to cause the Company to repurchase the
Common Shares beneficially owned by such Person or to cause pressure on the
Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term financial gain
under circumstances where the Board determines that the best long-term
interests of the Company and its stockholders would not be served by taking
such action or entering into such transaction or series of transactions at
that time or (b) such Beneficial Ownership is causing or is reasonably
likely to cause a material adverse impact (including, but not limited to,
impairment of relationships with customers or suppliers, impairment of the
Company's ability to maintain its competitive position, adverse
consequences to the communities in which the Company is located and
impairment of the short-term and long-term interests of the Company
(including benefits that may accrue from the continued independence of the
Company) on the business or prospects of the Company;
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below and in Section 7(e) hereof, shall
thereafter have a right
17
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of Series A Preferred
Shares, and subject to the provisions of Section 11(a)(iii) below, such number
of Common Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandth of a Series A
Preferred Share for which a Right was exercisable immediately prior to the first
occurrence of an event set forth in Section 11(a)(ii) above, and dividing that
product (which, following such first occurrence, shall be referred to as the
"Purchase Price" for all purposes of this Agreement) by (y) fifty percent (50%)
of the current per share market price of the Common Shares (determined pursuant
to Section 11(d) hereof), but not less than the par value thereof, on the date
of such first occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that (x) the total of the Common Shares that are
issued but not outstanding and authorized but unissued (excluding Common
Shares reserved for issuance pursuant to the specific terms of any
indenture, option plan or other agreement) is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof
or (y) the total number of Common Shares available for exercise of the
Rights in accordance with Section 11(a)(ii) hereof is sufficient to permit
the exercise in full of the Rights in accordance with Section 11(a)(ii) but
the Board determines that such exercise of the Rights will not afford
adequate protection to the shareholders of the Company and that
shareholders should be given an option to acquire a substitute for the
Adjustment Shares, and subject to such limitations as are necessary to
prevent a default under any agreement for money borrowed to which the
Company is a party and to comply with applicable law, then the Board shall:
(A) determine the excess of (1) the value, based upon the current per share
market price of the Common Shares (determined pursuant to Section 11(d)
hereof), of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such excess, the
"Spread") and (B) with respect to each Right, make adequate provision to
substitute for, or provide an election to acquire in lieu of, the
Adjustment Shares, upon payment of the applicable Purchase Price (which
term shall include any reduced Purchase Price) any combination of the
following having an aggregate value equal to the Current Value (such
aggregate value to be determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board): (1) a
reduction in the Purchase Price, (2) Common Shares and/or other equity
securities of the Company (including, without limitation, shares or units
of shares of any series of preferred stock that the Board has deemed to
have the same value as Common Shares (such shares or units of share of
preferred stock hereinafter referred to as "Common Share equivalents"))
and/or (3) debt securities of the Company and/or cash and other assets;
provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
days following the first occurrence of a Triggering Event, then the Company
shall be obligated to deliver, upon the surrender for exercise
18
of a Right and without requiring payment of the Purchase Price, Common
Shares (to the extent available) and then, if necessary, cash, which
securities and/or cash in the aggregate are equal to the Spread. If the
Board shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days
following the first occurrence of a Triggering Event, in order that the
Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action needs
to 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
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 promptly notify the Rights Agent
thereof and shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement (with prompt notice thereof to the Rights Agent) at
such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the current per
share market price (as determined pursuant to Section 11(d) hereof) of the
Common Shares on the date of the first occurrence of a Triggering Event.
The provisions of this Section 11(a)(iii) shall apply only to Common
Shares of the Company and shall not apply to the securities of any other Person.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Series A Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Series A Preferred Shares (or shares having
the same rights, privileges and preferences as the Series A Preferred Shares
("equivalent shares")) or securities convertible into Series A Preferred Shares
or equivalent shares at a price per Series A Preferred Share or equivalent share
(or having a conversion price per share, if a security convertible into Series A
Preferred Shares or equivalent shares) less than the current per share market
price of the Series A Preferred Shares (as defined in Section 11(d) hereof) on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Series A Preferred Shares outstanding on such record date plus the
number of Series A Preferred Shares that the aggregate offering price of the
total number of Series A Preferred Shares and/or equivalent shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such
19
current market price and the denominator of which shall be the number of Series
A Preferred Shares outstanding on such record date plus the number of additional
Series A Preferred Shares and/or equivalent shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). 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 Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the holders of the Rights. Series A Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price that would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for the distribution to
all holders of the Series A Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of any debt securities, cash or assets
(other than a regular quarterly cash dividend or a dividend payable in Series A
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current per share market price of the Series A Preferred Shares (as
defined in Section 11(d) hereof) on such record date, less the fair market value
(as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and binding on the holders
of Rights) of the portion of the assets or debt securities so to be distributed
or of such subscription rights or warrants applicable to one Series A Preferred
Share and the denominator of which shall be such current per share market price
of the Series A Preferred Shares (as determined pursuant to Section 11(d)
hereof). 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 Purchase
Price shall again be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of the Common Shares on any date shall be deemed to be the
lesser of (x) the average of the daily closing prices per Common Share for the
30 consecutive Trading Days immediately prior to, but not including, such date
or (y) the average of the daily closing prices per Common Share for the 30
consecutive Trading Days immediately following, but not including, such date;
provided, however, that in the event that the current per share market price of
the Common Shares is determined during a period following the announcement by
the issuer of such Common Shares of a dividend or distribution on such Common
Shares payable in such Common
20
Shares or securities convertible into such Common Shares (other than the
Rights), or any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of 20 Trading Days after the ex-dividend
date for such dividend or distribution, then, and in each such case, the current
market price shall be appropriately adjusted to reflect the current market price
per Common Share equivalent. 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 on the principal national securities exchange, if any, on
which the Common Shares are then listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Shares selected by the Board. The term "Trading Day" shall mean a day on which
the principal national securities exchange or NASDAQ on which the Common Shares
are listed or traded or are admitted to trading is open for the transaction of
business or, if the Common Shares are not listed or admitted to trading on any
national securities exchange or NASDAQ, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Series A Preferred Shares shall be determined in the
same manner as set forth above for Common Shares in clause (i) of this Section
11(d). If the current per share market price of the Series A Preferred Shares
cannot be determined in the manner provided above, the "current per share market
price" of the Series A Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by 1,000. If neither the Common Shares nor the
Series A Preferred Shares are 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, whose determination shall be described in a statement filed
with the Rights Agent and binding on the holders of Rights.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
the Purchase Price; provided, however, that any adjustments that by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or the nearest one one-hundredth of
a Common Share or other share or one one-ten thousandth of a Series A Preferred
Share, as the case may be.
21
Notwithstanding the first sentence of this Section 11(e), any adjustment
provided for in this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction that requires such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any property, other securities (other than shares of capital
stock of the Company) or shares of capital stock of the Company other than
Series A Preferred Shares, thereafter the amount of such property, other
securities (other than shares of capital stock of the Company) and the number of
such other shares of capital stock so receivable upon exercise of any Right (as
well as any consideration to be paid therefor) 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 Series A Preferred Shares (and the
Purchase Price) contained in this Section 11, and the provisions of Sections 7,
9, 10 and 13 with respect to the Series A Preferred Shares shall apply on like
terms to any such property, other securities and other shares of capital stock.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Series A Preferred
Shares purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandth of a
Series A Preferred Share (calculated to the nearest one one-ten thousandth of a
Series A Preferred Share) obtained by (i) multiplying (x) the number of one
one-thousandth of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Series A 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-thousandth of a
Series 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 the number of Rights (calculated to the nearest
one-ten thousandth) obtained by dividing the
22
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights and shall provide written notice of such election to the
Rights Agent, indicating the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates 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 Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Series A Preferred Shares issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-thousandth of a share and the number of
shares that were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the then stated value, if any, of
the Series A Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Series A Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the Series A
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Series A Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such
23
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment. The Company shall provide the Rights Agent with
written notice of any adjustment in the Purchase Price.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Series A
Preferred Shares, (ii) issuance wholly for cash of any of the Series A Preferred
Shares at less than the current market price, (iii) issuance wholly for cash of
Series A Preferred Shares or securities that by their terms are convertible into
or exchangeable for Series A Preferred Shares, (iv) dividends on Series A
Preferred Shares payable in Series A Preferred Shares or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Series A Preferred Shares shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, and shall not
permit any Subsidiary, at any time after the Separation Date, to (i) consolidate
with, (ii) merge with or into or (iii) sell or transfer, in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person if at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the Separation Date,
it will not, except as permitted by Section 23, Section 24, Section 27 or
Section 31 hereof, take (or permit any Subsidiary to take) any action that at
the time it is reasonably foreseeable will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights; provided, however,
that the issuance of additional Rights pursuant hereto, including by action of
the Board under Section 22 hereof, shall not be deemed to violate this Section
11(o).
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Record Date (i) declare a
dividend on the outstanding Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, the number of Rights associated with
each Common Share then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated
(whether before or after the Separation Date) with each Common Share following
any such event
24
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event. For purposes of this Section 11(p), any Common Shares
issued after the Separation Date that were not issued together with a Right
(pursuant to the Preamble hereto or by action of the Board pursuant to Section
22 hereof) shall not be counted as outstanding.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief, reasonably detailed statement of the facts, computations and
methodology of accounting for such adjustment, (b) promptly file with the Rights
Agent and with each transfer agent for the Common Shares or the Series A
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Separation Date, to
each holder of a certificate representing Common Shares) in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained, and shall have no duty
with respect to, and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Shares Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person shall consolidate
with, or merge with or into, the Company and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in a single
transaction or a series of related transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company), then, and in each such case,
proper provision shall be made so that (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable
25
Common Shares of the Principal Party, not subject to any rights of first
refusal, redemption or repurchase, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of one
one-thousandth of a Series A Preferred Share for which a Right is exercisable
immediately prior to the first occurrence of a Section 13(a) Event (or, if any
event set forth in Sections 11(a)(ii) has occurred prior to the Section 13(a)
Event, multiplying the number of such fractional shares for which a Right was
exercisable immediately prior to the first occurrence of an event set forth in
Sections 11(a)(ii) hereof by the Purchase Price immediately prior to such first
occurrence), and dividing that product (which, following the Section 13(a)
Event, shall thereafter be referred to as the "Purchase Price" for all purposes
of this Agreement) by (2) fifty percent (50%) of the current per share market
price (determined pursuant to Section 11(d) hereof) per Common Share (or other
securities or property as provided for herein) of such Principal Party on the
date of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to 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(a) Event and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; and (v) the provisions of Sections 11(a)(ii) and
11(a)(iii) hereof shall thereafter be of no effect following the first
occurrence of a Section 13(a) Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or clause
(y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such case, (1) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer
26
to such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares, which have not been issued or reserved for issuance,
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Final Expiration Date; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates that comply in all respects
with the requirements for registration on Form 10 under the Exchange Act. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that one of the
transactions described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights
that have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Separation Date as provided in Section 11(p) hereof, or to
distribute Right Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
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. The closing price for any day
27
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange, if any, on which the Rights are then listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over- the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date the Rights are not publicly held or
so listed or traded, the current market value of a whole Right shall mean the
fair value of a whole Right as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
binding on the holders of Rights.
(b) The Company shall not be required to issue fractions of Series A
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Series A Preferred Share) upon exercise of the Rights or to
distribute certificates that evidence fractional Series A Preferred Shares
(other than fractions that are integral multiples of one one-thousandth of a
Series A Preferred Share). Fractions of Series A Preferred Shares in integral
multiples of one one-thousandth of a Series 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 Series A Preferred Shares. In lieu of
fractional Series A Preferred Shares that are not integral multiples of one
one-thousandth of a Series A Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Series A Preferred Share. For purposes of this Section
14(b), the current market value of a Series A Preferred Share shall be the
closing price of a Series A Preferred Share (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates that evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Common
Share. For purposes of this Section 14(c), the current market value of one
Common Share shall be
28
the closing price of one Common Share (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right, by the acceptance of the Rights, expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as otherwise set forth herein. The
Rights Agent shall have no duty or obligations with respect to this section 14
unless and until it has received specific instructions (and sufficient cash, if
required) from the Company with respect to its duties and obligations.
Section 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 Right
Certificates (and, prior to the Separation Date, the registered holders of any
certificate representing Common Shares); and any registered holder of any Right
Certificate (or, prior to the Separation Date, of any other certificate
representing Common Shares), without the consent of the Rights Agent or of the
holder of any other Right Certificate (or, prior to the Separation Date, of the
Common Shares), 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 right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right 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.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Separation Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Separation Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and with appropriate forms and certificates fully
executed; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Separation Date, the
29
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificates 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.
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Series A Preferred
Shares, or any other securities of the Company, that may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent 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 preparation, delivery, amendment,
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, damage, judgment,
ruling (interlocutory or final), fine, penalty, claim, demand, settlement (but
with respect to any settlement only with the Company's prior consent, which
shall not be unreasonably withheld), cost or expense, incurred without gross
negligence, bad faith or willful misconduct (as finally determined by a court of
competent jurisdiction) on the part of the Rights Agent, for
30
any action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, without limitation
the costs and expenses of defending against any claim of liability in the
premises. The indemnity provided herein shall survive the termination of this
Agreement and the termination and expiration of the Rights. The costs and
expenses incurred in enforcing this right of indemnification shall be paid by
the Company. Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the possibility of
such loss or damage. Any liability of the Rights Agent under this Rights
Agreement will be limited to the amount of fees paid by the Company to the
Rights Agent hereunder.
(b) The Rights Agent shall be fully indemnified against, shall be
protected from, and shall incur no liability or expense (including without
limitation attorneys' fees and expenses) for, or in respect of, any action
taken, suffered or omitted by it in connection with, the acceptance and
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Series A Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, instruction,
consent, certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
its counsel as set forth in Section 20 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained. The Rights Agent shall not be deemed to have any duty or notice
unless and until the Company has provided the Rights Agent with written notice.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services 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 Person 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 Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
31
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, by all of which
the Company and the holders of Right 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 and
the Rights Agent shall incur no liability for, or in respect of, any action
taken, suffered, 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 be
proved or established by the Company prior to taking, suffering or omitting 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 Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for, or in respect of, for any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
32
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility or liability
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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Series A Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Series A 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 advice
or 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 Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
such advice or instructions shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for, or in respect
of, any action taken, suffered or omitted by it in good faith in accordance with
the advice or instructions of any such officer. The Rights Agent may
conclusively rely on the most recent advice or instructions given by any such
officer.
(h) The Rights Agent and any shareholder, affiliate, 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
33
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 Person or 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 or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct 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 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 Right 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 on such
certificate attached to the form of assignment or form of election to purchase,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Series A Preferred Shares by registered or certified
mail. In such event, the Company shall give written notice of such resignation
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Series A Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his or her Right Certificate for inspection
by the Company), then the registered holder of any Right Certificate may apply
to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a Person
organized and doing business under the laws of the United States or of any state
of the United States, in good standing, that is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Series A Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, the Company may,
if deemed necessary or appropriate by the Board, issue Right Certificates in
connection with the issuance or sale of Common Shares following the Separation
Date.
Section 23. Redemption.
(a) The Board may, at its option, at any time prior to the earlier of
(A) the date a Person becomes an Acquiring Person or (B) the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of One Tenth of One Cent ($0.001) per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price").
(b) In the case of a redemption permitted under Section 23(a),
immediately upon the action of the Board 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.
35
Within ten days after the action of the Board ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights (in case of notice to holders) 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 Separation Date, on the registry books of
the Transfer Agent for the Common Shares; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
redemption. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the right of the
Company to redeem the Rights has expired or terminated, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 7(e) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary or the Company, any employee benefit plan of the
Company or any such Subsidiary, or Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty
percent (50%) or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) 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 the holders of such Rights shall be to receive
that number of Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give written
notice to the Rights Agent and public notice of any such exchange; provided,
however, that failure to give, or any defect in, such notice shall not affect
the validity of such exchange. The Company promptly shall mail a notice of any
such exchange to the Rights Agent and 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 that 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 Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected
36
pro rata based on the number of Rights (other than Rights that have become null
and void pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Series A Preferred Shares for Common Shares at the rate
of one one-thousandth of a Series A Preferred Share for each Right.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Series A Preferred
Shares (except as hereinafter provided) or fractional Common Shares, but if the
exchange is for Series A Preferred Shares, the Company shall be obligated to
issue fractional shares so long as any fraction of a Series A Preferred Share so
to be issued is at least equal to one one-thousandth of a Series A Preferred
Share. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share. For the purposes of
this Section 24(d), (i) the current market value of a whole Common Share shall
be the per share market price determined as of the day immediately following the
day of the public announcement by the Company that an exchange is to be effected
pursuant to this Section 24 and (ii) the current market value of a Series A
Preferred Share or fraction of a Series A Preferred Share shall be the current
market value on such day of a Series A Preferred Share (or fraction of a Series
A Preferred Share) as determined in accordance with Section 11(d)(ii) hereof.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Separation
Date, (i) to pay any dividend payable in stock of any class to the holders of
Series A Preferred Shares or to make any other distribution to the holders of
Series A Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Series A Preferred Shares rights or warrants to
subscribe for or to purchase any additional Series A Preferred Shares or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of Series A Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Series A
Preferred Shares), (iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than fifty percent (50%) of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and to each holder of a Right
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights
37
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Common Shares and/or Series
A Preferred Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the Series A Preferred
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or Series
A Preferred Shares, whichever shall be the earlier.
(b) In case of the occurrence of a Section 11(a)(ii) Event, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
the Rights Agent and to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii), and (ii) all references in the
preceding paragraph to Series A Preferred Shares shall be deemed thereafter to
refer to Common Shares and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the 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:
PFSWeb, Inc.
000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx, Xxxxx 00000
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or
38
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 Rights Agent.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and, if such
supplement or amendment affects the rights, duties or obligations of the Rights
Agent, the Rights Agent; provided, however, that (i) the Rights Agent cannot be
required to change or amend its duties and obligations under this Agreement, and
(ii) from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect the
interests of the Rights Agent or the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company, which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Notwithstanding
the foregoing, any supplement or amendment shall not change or increase the
Rights Agent's duties, liabilities or obligation hereunder, unless consented to
by the Rights Agent in writing and, if requested by the Rights Agent, only
following receipt of an opinion of counsel in connection therewith.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time and any determination of the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner shall be made in accordance with the provisions of Rule
13d-3(d)(1)(i) of the Rules as in effect as of the date hereof. The Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers 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 (ii) below, all omissions with respect to the foregoing) that are done or
made by the Board, in good faith, shall (i) be final, conclusive and binding on
the Company, the Rights Agent, the
39
holders of the Right Certificates and all other parties and (ii) not subject the
Board or the Independent Directors to any liability to the holders of the Right
Certificates.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Separation
Date, the Common Shares) 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 Right
Certificates (and, prior to the Separation Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board 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.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware, and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State; provided, however, that all provisions
regarding the rights, duties and obligation of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State; and
any provision of this Agreement and each such Right Certificate relating to the
internal corporate governance or other affairs of the Company shall be governed
by and construed in accordance with the laws of the State of Delaware.
Section 33. Consequential Damages. Neither party to this Agreement
shall be liable to the other party or any other Person for consequential
damages.
Section 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.
40
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience of reference only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PFSWEB, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Regional Manager and Vice President
EXHIBIT A
PFSWEB, INC.
CERTIFICATE OF DESIGNATIONS
in respect of
SERIES A PREFERRED STOCK
------------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
------------------------
The undersigned, being ______________________ of PFSWEB, INC. (the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, hereby certifies that, pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation duly adopted the following
resolution at a meeting of said Board of Directors duly called and held on June
8, 2000, which resolution remains in full force and effect as of the date
hereof:
RESOLVED, that the Board of Directors of the Corporation,
pursuant to authority expressly vested in it by the provisions of the
Corporation's Certificate of Incorporation, as amended (the "Charter"),
hereby establishes a series of the preferred stock, par value $1.00 per
share, of the Corporation and fixes the number of shares of such series
and the powers, designations, preferences and relative, participating,
optional or other rights of such series, and the qualifications,
limitations or restrictions thereof, as follows:
A-2
This series of preferred stock, par value $1.00 per share, of the
Corporation shall be, and hereby is, designated "Series A Preferred
Stock" (the "Series A Shares"), and the number of shares constituting
such series shall be one hundred thousand (100,000). The relative
rights and preferences of the Series A Shares shall be as follows:
Section A. Dividends and Distributions.
(1) Subject to the prior and superior rights of the holders of any
shares of any series of stock ranking prior and superior to the Series A Shares
with respect to dividends, the holders of Series A Shares, in preference to the
holders of Common Stock, par value $0.001 per share, of the Corporation (the
"Common Stock") and of any other junior stock, shall be entitled to receive,
when and as declared by the Board of Directors, out of any funds lawfully
available therefor, cash dividends thereon, payable quarterly, from the date of
issuance thereof, upon the last days of June, September, December and March in
each year (each such date being referred to herein as a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the first issuance
of a Series A Share, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $0.005 or (b) subject to the provisions for adjustment
hereinafter set forth, 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 or
distribution 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 Dividend Payment Date or,
with respect
A-3
to the first Dividend Payment Date, since the first issuance of any
Series A Share. In the event the Corporation shall at any time after July 6,
2000 (i) declare any dividend on 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 amounts
to which holders of Series A Shares were entitled immediately prior to such
event under clause (a) and clause (b) of the preceding sentence shall be
adjusted by multiplying each such amount by a fraction the numerator of which is
the number of shares of Common Shares outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution on the
Series A Shares as provided in paragraph (1) of this Section A immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend or distribution payable in shares of Common Stock); provided, that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Dividend Payment Date and the next
subsequent Dividend Payment Date, a dividend of $0.005 per share of the Series A
Shares shall nevertheless be payable on such subsequent Dividend Payment Date;
and provided, further that nothing contained in this paragraph (2) shall be
construed so as to conflict with any provision relating to the declaration of
dividends contained in the Charter.
(3) Dividends shall begin to accrue and be cumulative on outstanding
Series A Shares from the Dividend Payment Date next preceding the date of issue
of such
A-4
Series A Shares, unless (a) the date of issue of such shares is prior
to the record date for the first Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such shares, or
(b) the date of issue is a Dividend Payment Date or is a date after the record
date for the determination of holders of Series A Shares entitled to receive a
quarterly dividend and before such Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the Series A Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
Series A Shares entitled to receive payment of a dividend or distribution
declared thereon.
Section B. Redemption. The Series A Shares are not redeemable.
Section C. Liquidation, Dissolution or Winding Up. In the event of the
voluntary or involuntary liquidation of the Corporation the "preferential
amount" which the holders of the Series A Shares shall be entitled to receive
out of the assets of the Corporation shall be $1,000 per share plus all accrued
and unpaid dividends and distribution thereon. (1) Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (upon liquidation, dissolution or
winding up) to the Series A Shares unless, prior thereto, the holders of Series
A Shares shall have received $1,000 per share, plus an amount equal to
A-5
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of Series A Shares unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in paragraph (3) of this Section C to reflect such events
as stock splits, stock dividends and recapitalization with respect to the Common
Stock) (such number in clause (ii), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding Series A Shares and Common Stock,
respectively, holders of Series A Shares and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to one with respect to the
Series A Shares and Common Stock, on a per share basis, respectively.
(2) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Shares, then all such available assets
shall be distributed ratably to the holders of the Series A Shares and the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient
A-6
assets available to permit payment in full of the Common Adjustment, then any
such remaining assets shall be distributed ratably to the holders of Common
Stock.
(3) In the event the Corporation shall at any time after July 6, 2000
(i) declare any dividend on 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 Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section D. Sinking Fund. The Series A Shares shall not be entitled to
the benefit of any sinking fund for the redemption or purchase of such shares.
Section E. Conversion.
(1) Subject to paragraph (2) of this Section E, the Series A Shares
shall not be convertible.
(2) In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the Series A Shares shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) 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
A-7
Stock is changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence
with respect to the exchange or change of Series A Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section F. Voting Rights.
(1) The holders of Series A Shares shall have no voting rights except
as provided by Delaware statutes or by paragraph (2) of this Section F.
(2) So long as any Series A Shares shall be outstanding, and in
addition to any other approvals or consents required by law, without the consent
of the holders of 662/3% of the Series A Shares outstanding as of a record date
fixed by the Board of Directors, given either by their affirmative vote at a
special meeting called for that purpose, or, if permitted by law, in writing
without a meeting:
(i) The Corporation shall not sell, transfer or lease all or
substantially all the properties and assets of the Corporation;
provided, however, that nothing herein shall require the consent of
the holders of Series A Shares for or in respect of the creation of
any mortgage, pledge, or other lien upon all or any part of the assets
of the Corporation.
A-8
(ii) The Corporation shall not effect a merger or consolidation with
any other corporation or corporations unless as a result of such
merger or consolidation and after giving effect thereto holders of
Series A Shares are entitled to receive a per share amount and type of
consideration equal to the product arrived at by multiplying the
Adjustment Number by the per share amount and type of consideration
received by holders of shares of Common Stock, or (1) either (A) the
Corporation shall be the surviving corporation or (B) if the
Corporation is not the surviving corporation, the successor
corporation shall be a corporation duly organized and existing under
the laws of any state of the United States of America or the District
of Columbia, and all obligations of the Corporation with respect to
the Series A Shares shall be assumed by successor corporation, (2) the
Series A Shares then outstanding shall continue to be outstanding, and
(3) there shall be no alteration or change in the designation or the
preferences, relative rights or limitations applicable to outstanding
Series A Shares prejudicial to the holders thereof.
(iii) The Corporation shall not amend, alter or repeal any of the
provisions of its Certificate of Incorporation in any manner which adversely
affects the relative rights, preferences or limitations of the Series A Shares
or the holders thereof.
Section G. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Shares as provided in Section A are in
arrears, thereafter and until
A-9
all accrued and unpaid dividends and distributions, whether or not declared, on
Series A Shares outstanding shall have been paid in full, the Corporation 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 (as to dividends) to the Series A
Shares;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (as to dividends) with the
Series A Shares, except dividends paid ratably on the Series A Shares
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (as to dividends) to the Series A
Shares, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation, ranking junior (as to
dividends) to the Series A Shares; and
(iv) purchase or otherwise acquire for consideration any Series A
Shares, or any shares of stock ranking on a parity (as to dividends)
with the Series A Shares, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors ) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and the relative rights and preferences of the respective series
A-10
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(2) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (1) of this Section G,
purchase or otherwise acquire such shares at such time and in such manner.
Section H. Fractional Shares. The Corporation may issue fractions and
certificates representing fractions of Series A Shares in integral multiples of
1/1000th of a Series A Share, or in lieu thereof, at the election of the Board
of Directors of the Corporation at the time of the first issue of any Series A
Shares, evidence such fractions by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depository selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all rights, privileges and preferences to which they would
be entitled as beneficial owners of Series A Shares. In the event that
fractional Series A Shares are issued, the holders thereof shall have all the
rights provided herein of holders of full Series A Shares in the proportion
which such fraction bears to a full share.
IN TESTIMONY WHEREOF, PFSWEB, INC. has caused this Statement to be
signed under its corporate seal by its _____________________ and its Secretary
as of the 8th day of June, 2000. PFSWEB, INC.
By:
--------------------------------
Name:
Title:
ATTEST:
--------------------------------
Name:
Title:
B-1
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER [________________] OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT (AS HEREINAFTER DEFINED)) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR BECOME
B-2
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
AGREEMENT.]1/
Right Certificate
PFSWEB, INC.
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 8, 2000 (the "Rights Agreement"), between PFSWEB,
INC., a Delaware corporation (the "Company"), and CHASEMELLON SHAREHOLDER
SERVICES, LLC, a New Jersey limited liability company (the "Rights Agent"), to
purchase from the Company at any time after the Separation Date (as such term is
defined in the Rights Agreement) and prior to the close of business (5:00 PM New
York time) on July 6, 2010, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series A Preferred Stock,
par value $1.00 per share ("Series A 1/ The portion of the legend in brackets
shall be inserted if applicable and shall replace the preceding sentence.
Share") of the Company, at a purchase price of $67 per one one-thousandth of a
share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of rights evidenced by this Right Certificate (and the
number of shares that may be purchased 2 exercise thereof) set forth above, and
the Purchase Price per share set forth above, are the number and Purchase Price
as of June 8, 2000, based on the Series A Shares as constituted at such date.
Upon the occurrence of a Triggering Event (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (a) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(b) a transferee of any such Acquiring Person, Associate or Affiliate or (c)
under certain circumstances specified in the Rights Agreement, a transferee of a
person or entity who, after such transfer, became an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such rights from and after the occurrence of any such Triggering
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Series A Shares or other securities or other property that may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
-----------------
1/ the portion of the legend in brackers shall be inserted if applicable and
shall replace the preceding sentence.
B-2
The Board may, at its option, at any time after the right of the
Company to redeem the Rights has expired or terminated, exchange all or part of
the then outstanding and exercisable Rights (other than those held by the
Acquiring Person and Affiliates and Associates of the Acquiring Person) for
Common Shares (as such term is defined in the Rights Agreement) at an exchange
ratio of one Common Share per Right, as adjusted. Immediately upon the action of
the Board ordering an exchange of the Rights, the Rights affected by such order
will no longer be exercisable and thereafter the only right of the holders of
such Rights will be to receive the Common Shares issuable by the Company in
exchange for such Rights.
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights for not more than ninety (90) days at the election of the Company
and under certain circumstances specified in such Rights Agreement. Copies of
the Rights Agreement are on file at the office of the Rights Agent and are also
available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Series A Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If the Rights evidenced by this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed at a redemption price of One Tenth of One
Cent ($0.001) per Right at any time prior to the earlier of (A) the date that a
Person becomes an Acquiring Person (as such term is defined in the Rights
Agreement) or (B) the Final Expiration Date (as such term is defined in the
Rights Agreement). Immediately upon the action of the Board ordering redemption
of the Rights, the Rights will no longer be exercisable; and, thereafter the
only right of the holders of the Rights evidenced hereby will be to receive the
Redemption Price.
The terms of the Rights evidenced by this Certificate may be
supplemented or amended without the approval of any holder of the Rights (or the
Common Shares) as set forth in the Rights Agreement.
B-4
No fractional Series A Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions that are integral
multiples of one one- thousandth of a Series A Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Series A Shares
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the Company.
Dated: ___________, 2000
PFSWEB, INC.
By
----------------------------------
Name:
Title:
Attest
---------------------
Name:
Title:
(Corporate Seal)
Countersigned
CHASEMELLON SHAREHOLDER
B-5
SERVICES, LLC
as Rights Agent
By ------------------------
B-6
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________ hereby sells, assigns
and transfers unto _________________________________________________________
(Please print name and address of Transferee)
____________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint __________________ attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, 20__
-------------------------
Signature
Signature Guaranteed:
B-7
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(i) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(ii) to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _____________, 20__ _________________________
Signature
NOTICE
The signature(s) to the foregoing Assignment and Certificate must
correspond to the name(s) as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-8
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: PFSWEB, INC.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Series A Shares (or
fractions thereof) issuable upon the exercise of such Rights (or such other
securities of the Company or of any other entity that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of:
Please insert social security
or other identifying number: ________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
B-9
Please insert social security
or other identifying number: _______________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: __________________, 20__
-------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) to the best knowledge of the undersigned, it [ ] did [ ] not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ________________, 20__
-------------------------
Signature
B-10
NOTICE
The signature(s) to the foregoing Election to Purchase and Certificate
must correspond to the name(s) as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT C
PSFWEB, INC.
Summary of Rights to Purchase Preferred Shares
Introduction
On June 8, 2000, the Board of Directors of our Company, PSFWeb, Inc., a
Delaware corporation, declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, par value $0.001 per
share. The dividend is payable to the stockholders of record as of the close of
business on July 6, 2000.
Our Board has adopted this Rights Agreement to protect stockholders
from coercive or otherwise unfair takeover tactics. In general terms, it works
by imposing a significant penalty upon any person or group which acquires 15% or
more of our outstanding common stock without the approval of our Board. The
Rights Agreement should not interfere with any merger or other business
combination approved by our Board.
For those interested in the specific terms of the Rights Agreement as
made between our Company and Chasemellon Shareholder Services, L.L.C., as the
Rights Agent, as of June 8, 2000, we provide the following summary description.
Please note, however, that this description is only a summary, and is not
complete, and should be read together with the entire Rights Agreement, which
has been filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A dated June 14, 2000. A copy of the agreement
is available free of charge from our Company.
The Rights. Our Board authorized the issuance of a Right with respect
to each issued and outstanding share of common stock on July 6, 2000. The Rights
will initially trade with, and will be inseparable from, the common stock. The
Rights are evidenced only by certificates that represent shares of common stock.
New Rights will accompany any new shares of common stock we issue after July 6,
2000 until the Separation Date described below.
Exercise Price. Each Right will allow its holder to purchase from our
Company one one-thousandth of a share of Series A Preferred Stock ("Preferred
Share") for $67, once the Rights become exercisable. This portion of a Preferred
Share will give the stockholder approximately the same dividend and liquidation
rights as would one share of common stock. Prior to exercise, the Right does not
give its holder any dividend, voting, or liquidation rights.
Exercisability. The Rights will not be exercisable until
C-2
o Ten days after the public announcement that a person or group has
become an "Acquiring Person" by obtaining beneficial ownership of 15% or more of
our outstanding common stock, or, if earlier,
o 15 business days (or a later date determined by our Board before any
person or group becomes an Acquiring Person) after a person or group begins a
tender or exchange offer which, if consummated, would result in that person or
group becoming an Acquiring Person.
We refer to the date when the Rights become exercisable as the
"Separation Date." Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of Rights. After that date, the Rights will separate from the common
stock and be evidenced by book-entry credits or by Rights certificates that we
will mail to all eligible holders of common stock. Any Rights held by an
Acquiring Person are void and may not be exercised.
Consequences of a Person or Group Becoming an Acquiring Person.
o Flip In. If a person or group becomes an Acquiring Person, all
holders of Rights except the Acquiring Person may, after the Separation Date,
for $67, purchase shares of our common stock with a market value of $134, based
on the market price of the common stock prior to such acquisition.
o Flip Over. If our Company is later acquired in a merger of similar
transaction after the Separation Date, all holders of Rights except the
Acquiring Person may, for $67, purchase shares of the acquiring corporation with
a market value of $134, based on the market price of the acquiring corporation's
stock, prior to such merger.
Preferred Share Provisions.
Each one one-thousandth of a Preferred Share, if issued:
o Will not be redeemable.
o Will entitle holders to quarterly dividend payments of
$0.005 per share, or an amount equal to the dividend paid on one share of common
stock, whichever is greater.
o Will entitle holders upon liquidation either to receive
$1.00 per share or an amount equal to the payment made on one share of common
stock, whichever is greater.
o Will have no voting rights except in limited circumstances.
C-3
o If shares of our common stock are exchanged via merger,
consolidation, or a similar transaction, will entitle holders to a per share
payment equal to the payment made on one share of common stock.
The value of one one-thousandth interest in a Preferred Share should approximate
the value of one share of common stock.
Expiration. The Rights will expire on July 6, 2010.
Redemption. Our Board may redeem the Rights for $0.001 per Right at any time
before a person or group becomes an Acquiring Person and before July 6, 2010. If
our Board redeems any Rights, it musts redeem all of the Rights. Once the Rights
are redeemed, the only right of the holders of Rights will be to receive the
redemption price of $0.001 per Right. The redemption price will be adjusted if
we have a stock split or stock dividends of our common stock.
Exchange. After the right of our Board to redeem the rights has expired, but
before an Acquiring Person owns 50% or more of our outstanding common stock, our
Board may extinguish the Rights by exchanging one share of common stock for each
Right, other than Rights held by the Acquiring Person.
Anti-Dilution Provisions. Our Board may adjust the purchase price of the
Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, a reclassification of the Preferred Shares or common stock. No
adjustments to the purchase price of less than 1% will be made.
Amendments. The terms of the Rights Agreement may be amended by our Board
without the consent of the holders of the Rights. After a person or group
becomes an Acquiring Person, and, as a result, there is a Separation Date, our
Board may not amend the agreement in a way that adversely affects the holders of
the Rights.
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definitions..........................................................................1
Section 2. Appointment of Rights Agent..................................................................6
Section 3. Issue of Right Certificates..................................................................6
Section 4. Form of Right Certificates...................................................................8
Section 5. Countersignature and Registration............................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates............................................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.................................................................................10
Section 8. Cancellation and Destruction of Right Certificates..........................................12
Section 9. Reservation and Availability of Series A Preferred
Shares; Registration...................................................................12
Section 10. Series A Preferred Shares Record Date......................................................14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.............................................................14
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares.................................................................................21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power..........................................................................22
Section 14. Fractional Rights and Fractional Shares....................................................24
Section 15. Rights of Action...........................................................................25
Section 16. Agreement of Right Holders.................................................................25
Section 17. Right Certificate Holder Not Deemed a Stock................................................26
Section 18. Concerning the Rights Agent................................................................26
i
Section 19. Merger or Consolidation or Change of Name of Rights
Agent..................................................................................27
Section 20. Duties of Rights Agent.....................................................................28
Section 21. Change of Rights Agent.....................................................................30
Section 22. Issuance of New Right Certificates.........................................................31
Section 23. Redemption.................................................................................31
Section 24. Exchange...................................................................................32
Section 25. Notice of Certain Events...................................................................33
Section 26. Notices....................................................................................34
Section 27. Supplements and Amendments.................................................................34
Section 28. Successors.................................................................................34
Section 29. Determinations and Actions by the Board of Directors.......................................35
Section 30. Benefits of this Agreement.................................................................35
Section 31. Severability...............................................................................35
Section 32. Governing Law..............................................................................35
Section 33. Consequential Damages......................................................................36
Section 34. Counterparts...............................................................................36
Section 35. Descriptive Headings.......................................................................36
Exhibits
--------
A. Certificate of Designations in respect of Series A Preferred Stock
B. Form of Right Certificate
C. Summary of Rights to Purchase Series A Preferred Stock
ii
