EXHIBIT 1
Realty Income Corporation
and
The Bank of New York
as Rights Agent
Rights Agreement
Dated as of June 25, 1998
RIGHTS AGREEMENT
Rights Agreement, dated as of June 25, 1998, between Realty
Income Corporation, a Maryland corporation (the "Company"), and
The Bank of New York, a New York banking corporation, as Rights
Agent (the "Rights Agent").
RECITALS
WHEREAS, on June 10, 1998, the Board of Directors of the
Company adopted this Agreement, and has authorized and declared a
dividend of one preferred share purchase right (a "Right") for
each Common Share (as defined in Section 1.6) of the Company
outstanding at the close of business on July 1, 1998 (the "Record
Date") and has authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each
Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date and the Expiration
Date (as such terms are defined in Sections 3.1 and 7.1), each
Right initially representing the right to purchase one one-
hundredth (subject to adjustment) of a share of Class A Junior
Participating Preferred Stock (the "Preferred Shares") of the
Company having the rights, powers and preferences set forth in
the form of Articles Supplementary attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set
forth; provided, however, that Rights may be issued with respect
to Common Shares that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance
with Section 22.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1. "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding but shall not include an Exempt Person
(as such term is hereinafter defined). Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the
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 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 solely by reason of share purchases by
the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of one or more additional Common
Shares of the Company (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding
Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person
shall be deemed to be an "Acquiring Person" unless upon becoming
the Beneficial Owner of such additional shares of Common Stock
such Person does not beneficially own 15% or more of the shares
of Common Stock then outstanding. 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 provisions of this Section 1.1,
has become such inadvertently (including, without limitation,
because (A) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person
to be an "Acquiring Person" or (B) such Person was aware of the
extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership
under this Agreement), and without any intention of changing or
influencing control of the Company, and 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 of this Section 1.1,
then such Person shall not be deemed to be or have become an
"Acquiring Person" at any time for any purposes of this
Agreement. For all purposes of this Agreement, any calculation
of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement.
1.2. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations, under the Exchange Act, as in effect on
the date of this Agreement.
1.3. A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable immediately,
or only after the passage of time, compliance with regulatory
requirements, fulfillment of a condition or otherwise) pursuant
to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, (w)
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, (x) securities which such Person has a
right to acquire upon the exercise of Rights at any time prior to
the time that any Person becomes an Acquiring Person, (y)
securities issuable upon the exercise of Rights from and after
the time that any Person becomes an Acquiring Person if such
Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3.1 or Section 22 ("Original Rights") or
pursuant to Section 11.9 or Section 11.15 with respect to an
adjustment to Original Rights or (z) securities which such Person
or any of such Person's Affiliates or Associates may acquire,
does or do acquire or may be deemed to have the right to acquire,
pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of his Affiliates or
Associates) if such agreement has been approved by the Board of
Directors of the Company prior to such Person's becoming an
Acquiring Person; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any security
under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) and with respect to which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities), whether or not in
writing, for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy or consent as described in the
proviso to Section 1.3(ii)(B)) or disposing of any securities of
the Company; provided, however, that no Person who is an officer,
director or employee of an Exempt Person shall be deemed, solely
by reason of such Person's status or authority as such, to be the
"Beneficial Owner" of, to have "Beneficial Ownership" of or to
"beneficially own" any securities that are "beneficially owned"
(as defined in this Section 1.3), including, without limitation,
in a fiduciary capacity, by an Exempt Person or by any other such
officer, director or employee of an Exempt Person.
1.4. "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
1.5. "close of business" on any given date shall mean 5:00
p.m., California time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m.,
California time, on the next succeeding Business Day.
1.6. "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $1.00
per share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall mean the
capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or
direct the management, of such other Person or, if such Person is
a Subsidiary (as such term is hereinafter defined) of another
Person, the Person or Persons which ultimately control such
first-mentioned Person, and which has issued and outstanding such
capital stock, equity securities or equity interest.
1.7. "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a
member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or an employee,
director, representative, nominee or designee of any Acquiring
Person or of any such Affiliate or Associate, and was a member of
the Board prior to the time that any Person becomes an Acquiring
Person or (ii) any Person (during such period in which such
Person is a member of the Board) who, after the time that any
Person becomes an Acquiring Person, becomes a member of the Board
and who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or an employee, director, representative,
nominee or designee of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election
or election to the Board is recommended or approved by a majority
of the Continuing Directors.
1.8. "Exempt Person" shall mean the Company, any
Subsidiary of the Company, in each case including, without
limitation, its fiduciary capacity, or any employee benefit plan
of the Company or of any Subsidiary of the Company or any entity
or trustee holding shares of stock of the Company for or pursuant
to the terms of any such plan, or for the purpose of funding
other employee benefits for employees of the Company or any
Subsidiary of the Company.
1.9. "Person" shall mean any individual, partnership,
joint venture, limited liability company, firm, corporation,
unincorporated association, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
1.10. "Shares Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition,
shall include, without limitation, the filing of a report
pursuant to Section 13(d) of the Exchange Act or pursuant to a
comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses
information which reveals the existence of an Acquiring Person or
such earlier date as a majority of the Board of Directors shall
become aware of the existence of an Acquiring Person.
1.11. "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interests is
owned, of record or beneficially, directly or indirectly, by such
Person.
1.12. A "Trigger Event" shall be deemed to have occurred
upon any Person becoming an Acquiring Person.
1.13. The following terms shall have the meanings defined
for such terms in the Sections set forth below:
Term Section
------------------------------ --------
Adjustment Shares 11.1.2
Common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Expiration Date 7.1
Final Expiration Date 7.1
NASDAQ 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3,
shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable. In the event the Company
appoints one or more co-Rights Agents, the respective duties of
the Rights Agent and any co-Rights Agent shall be as the Company
shall determine. Contemporaneously with such appointment, if
any, the Company shall notify the Rights Agent thereof.
Section 3. Issuance of Right Certificates.
3.1. Rights Represented by Share Certificates. Until the
earlier of (i) the tenth day after the Shares Acquisition Date or
(ii) the tenth Business Day after the date of the commencement
of, or first public announcement of the intent of any Person
(other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person (other
than an Exempt Person) becoming the Beneficial Owner of Common
Shares aggregating 15% or more of the then outstanding Common
Shares of the Company (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights (unless
earlier expired, redeemed or terminated) will be represented
(subject to the provisions of Section 3.2) by the certificates
for Common Shares registered in the names of the holders thereof
(which certificates for Common Shares shall also be deemed to be
Right Certificates) and not by separate certificates, and (y) the
Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the
underlying Common Shares. The preceding sentence
notwithstanding, prior to the occurrence of a Distribution Date
specified as a result of an event described in clause (ii) (or
such later Distribution Date as the Board of Directors of the
Company may select pursuant to this sentence), the Board of
Directors may postpone, one or more times, the Distribution Date
which would occur as a result of an event described in clause
(ii) beyond the date set forth in such clause (ii). Nothing
herein shall permit such a postponement of a Distribution Date
after a Person becomes an Acquiring Person, except as a result of
the operation of the third sentence of Section 1.1. As soon as
practicable after the Distribution Date, the Company will prepare
and execute, the Rights Agent will countersign and the Company
(or, if requested, the Rights Agent) will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Distribution Date (other than any
Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of
the Company, one or more certificates for Rights, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), representing one Right (subject to adjustment as
provided herein) for each Common Share so held. As of the
Distribution Date, the Rights will be represented solely by such
Right Certificates.
3.2. Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be sent
a copy of a Summary of Rights to Purchase Preferred Shares, 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 close of business on the Record Date, until
the Distribution Date (or the earlier Expiration Date), the
Rights will be represented by such certificates for Common Shares
registered in the names of the holders thereof together with a
copy of the Summary of Rights and the registered holders of the
Common Shares shall also be registered holders of the associated
Rights. Until the Distribution Date (or the earlier Expiration
Date), the surrender for transfer of any certificate for Common
Shares outstanding at the close of business on the Record Date,
with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common
Shares represented thereby.
3.3. New Certificates After Record Date. Certificates for
Common Shares which become outstanding (whether upon issuance out
of authorized but unissued Common Shares, or transfer or exchange
of outstanding Common Shares) after the Record Date but prior to
the earliest of the Distribution Date or the Expiration Date,
shall be deemed also to be certificates for Rights, and shall
have impressed, printed, stamped, written or otherwise affixed
onto them the following legend:
This certificate also represents and entitles the holder
hereof to certain rights as set forth in an Agreement
between Realty Income Corporation (the "Company") and The
Bank of New York as Rights Agent, dated as of June __, 1998,
as the same may be amended from time to time (the
"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 the Company. Under certain
circumstances, as set forth in the Agreement, such
Rights will be represented by separate certificates and will
no longer be represented by this certificate. The Company
will mail to the holder of this certificate a copy of the
Agreement without charge after receipt of a written request
therefor. AS DESCRIBED IN THE AGREEMENT, RIGHTS WHICH ARE
OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BY ACQUIRING
PERSONS OR ASSOCIATES OR AFFILIATES THEREOF (AS DEFINED IN
THE AGREEMENT) SHALL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
With respect to such certificates containing the foregoing
legend, until the Distribution Date (or the earlier Expiration
Date), the Rights associated with the Common Shares represented
by such certificates shall be represented by such certificates
alone, and the surrender for transfer of any such certificates,
except as otherwise provided herein, shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Notwithstanding this Section 3.3, the omission of a legend
shall not affect the enforceability of any part of this Agreement
or the rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares,
certification and 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 and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange or trading system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the
terms and conditions hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and shall show the
date of countersignature by the Rights Agent, and on their face
shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein
at the price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one one-
hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its
Chairman of the Board of Directors, President or any Vice
President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either
manually or by facsimile signature, by an authorized signatory of
the Rights Agent, but it shall not be necessary for the same
signatory to countersign all of the Right Certificates hereunder.
No Right Certificate shall be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right
Certificates, 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 Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights represented 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. Subject to the provisions of Section 7.5, Section
11.1.2 and Section 14, at any time after the close of business on
the Distribution Date, and at or prior to the close of business
on the Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights
that have become void pursuant to Section 11.1.2 or that have
been exchanged pursuant to Section 27) may be transferred, split
up or combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a
like number of one one-hundredths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up or combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent,
and shall surrender, together with any required form of
assignment and certificate duly completed, the Right Certificate
or Right Certificates to be transferred, split up or combined or
exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate or Right
Certificates until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate or Right Certificates and
shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall 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 from the holders of Right Certificates of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up or
combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2 , at any time
after the Distribution Date and prior to the Expiration Date,
upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for countersignature and 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.
7.1. Exercise of Rights. Subject to Section 11.1.2 and
except as otherwise provided herein, the registered holder of any
Right Certificate may exercise the Rights represented thereby in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-
hundredths of a Preferred Share (or other securities, cash or
other assets) as to which the Rights are exercised, at or prior
to the time (the "Expiration Date") that is the earliest of (i)
the close of business on July 1, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date"), (iii) the closing
of any merger or other acquisition transaction involving the
Company pursuant to an agreement of the type described in
Sections 1.3(ii)(A)(z) and 13.3, at which time the Rights are
deemed terminated, or (iv) the time at which the Rights are
exchanged as provided in Section 27.
7.2. Purchase . The Purchase Price for each one one-
hundredth of a Preferred Share pursuant to the exercise of a
Right shall be initially $104.50, shall be subject to adjustment
from time to time as provided in Sections 11, 13 and 26 and shall
be payable in lawful money of the United States of America in
accordance with Section 7.3.
7.3. Payment Procedures. Upon receipt of a Right
Certificate representing exercisable Rights, with the form of
election to purchase and certification duly executed, accompanied
by payment of the aggregate Purchase Price for the total number
of one one-hundredths of a Preferred Share to be purchased and an
amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with
Section 9, in cash or by certified or cashier's check or money
order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i)(A) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is
the transfer agent) certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests,
or (B) if the Company shall have elected to deposit the total
number of Preferred Shares issuable upon exercise of the Rights
hereunder with a depository agent, requisition from the
depositary agent depositary receipts representing interests in
such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the 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 all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to
be paid in lieu of the issuance of fractional shares in
accordance with Section 14 or otherwise in accordance with
Section 11.1.3, (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) when appropriate, 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 of the Company, pay cash and/or distribute
other property pursuant to Section 11.1.3, the Company will make
all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
7.4. Partial Exercise. In case the registered holder of
any Right Certificate shall exercise less than all the Rights
represented thereby, a new Right Certificate representing Rights
equivalent to the Rights remaining unexercised shall be issued by
the Rights Agent and delivered to the registered holder of such
Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
7.5. Full Information Concerning Ownership.
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 of
Rights upon the occurrence of any purported exercise as set forth
in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise shall have been duly
completed and signed by the registered holder thereof and the
Company shall have been provided with such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of 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
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 Stock. The
Company covenants and agrees that from and after the Distribution
Date it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares (and, following the
occurrence of a Trigger Event, out of its authorized and unissued
Common Shares or other securities) the number of Preferred Shares
(and, following the occurrence of a Trigger Event, Common Shares
and/or other securities) that will be sufficient to permit the
exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the
occurrence of a Trigger Event, Common Shares and/or other
securities) issuable upon the exercise of Rights may be listed on
any national securities exchange or traded in the over-the-
counter market and quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
(including the National Market or Small Cap Market), 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 or admitted to trading on such exchange or
quoted on NASDAQ upon official notice of issuance upon such
exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(and, following the occurrence of a Trigger Event, Common Shares
and/or other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable
shares.
From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to
permit the issuance of Preferred Shares upon the exercise of
Rights, to register and qualify such Preferred Shares under the
Securities Act and any applicable state securities or "Blue Sky"
laws (to the extent exemptions therefrom are not available),
cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such
registration and qualifications effective until the earlier of
the date as of which the Rights are no longer exercisable for
such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 90 days,
the exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction
unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the
Securities Act (if required) shall have been declared effective.
The Company further covenants and agrees that it will pay
when due and payable any and all Federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any 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 transfer tax which 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
Preferred Shares (or Common Shares and/or other securities, as
the case may be) in a name other than that of, the registered
holder of the Right Certificate representing Rights surrendered
for exercise or to issue or deliver any certificates for
Preferred Shares (or Common Shares and/or other securities, as
the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for 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 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 representing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the 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
(fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the 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 represented thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote or to receive
dividends or other distributions, 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 of Shares
or Number of Rights. The Purchase Price, the number of Preferred
Shares or other securities or property purchasable upon exercise
of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
11.1. Post-Execution Events.
11.1.1. Corporate Dividends, Reclassifications, Etc. In
the event the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares
of its stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11.1, 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 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 stock which, if such Right
had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were
open, he 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 stock of the
Company issuable upon exercise of one Right. If an event occurs
which would require an adjustment under both Section 11.1.1 and
Section 11.1.2, the adjustment provided for in this Section
11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to, Section 11.1.2.
11.1.2. Acquiring Person Events; Triggering Events.
Subject to Sections 23.1 and 27, in the event that a Trigger
Event occurs, then, from and after the first occurrence of such
event, each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at a
price per Right equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without giving
effect to this Section 11.1.2), in accordance with the terms of
this Agreement and in lieu of Preferred Shares, 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-hundredths of a Preferred Share for which a
Right is then exercisable (without giving effect to this Section
11.1.2) and (y) dividing that product by 50% of the current per
share market price of the Common Shares (determined pursuant to
Section 11.4) on the first of the date of the occurrence of, or
the date of the first public announcement of, a Trigger Event
(the "Adjustment Shares"); provided that the Purchase Price and
the number of Adjustment Shares shall thereafter be subject to
further adjustment as appropriate in accordance with Section
11.6. Notwithstanding the foregoing, upon the occurrence of a
Trigger Event, any Rights that are or were acquired or
beneficially owned by (1) any Acquiring Person or any Associate
or Affiliate thereof, (2) a transferee of any Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (3) a transferee of
any Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance
of this Section 11.1.2, and subsequent transferees, shall become
void without any further action, and any holder (whether or not
such holder is an Acquiring Person or an Associate or Affiliate
of an Acquiring Person) of such Rights shall thereafter have no
right to exercise such Rights under any provision of this
Agreement or otherwise. The Company shall not enter into any
transaction of the type described in this Section 11.1.2 if at
the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any arrangements which,
as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be
afforded by the Rights. From and after the Trigger Event, no
Right Certificate shall be issued pursuant to Section 3 or
Section 6 that represents Rights that are or have become void
pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights
that are or have become void pursuant to the provisions of this
paragraph shall be canceled.
The Company shall use all reasonable efforts to ensure that
the provisions of this Section 11.1.2 are complied with, but
shall have no liability to any holder of Right Certificates or
other Person as a result of its failure to make any
determinations with respect to any Acquiring Person or its
Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in
Section 13.1, any Rights that theretofore have not been exercised
pursuant to this Section 11.1.2 shall thereafter be exercisable
only in accordance with Section 13 and not pursuant to this
Section 11.1.2.
11.1.3. Insufficient Shares. The Company may at its
option substitute for a Common Share issuable upon the exercise
of Rights in accordance with the foregoing Section 11.1.2 a
number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied
by such number or fraction is equal to the current per share
market price of one Common Share. In the event that upon the
occurrence of one or more of the events listed in Section 11.1.2
above there shall not be sufficient Common Shares authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall
take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights, provided,
however, that if the Company determines that it is unable to
cause the authorization of a sufficient number of additional
Common Shares, then, in the event the Rights become exercisable,
the Company, with respect to each Right and to the extent
necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party,
shall: (A) determine the excess of (1) the value 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 (other than Rights
which have become void pursuant to Section 11.1.2), make adequate
provision to substitute for the Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Preferred Shares or other equity
securities of the Company (including, without limitation, shares,
or fractions of shares, of preferred stock which, by virtue of
having dividend, voting and liquidation rights substantially
comparable to those of the Common Shares, the Board of Directors
of the Company has deemed in good faith to have substantially the
same value as Common Shares) (each such share of preferred stock
or fractions of shares of preferred stock constituting a "common
stock equivalent")), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized
investment banking firm selected in good faith by the Board of
Directors of the Company; provided, however, that if the Company
shall not have made adequate provision to deliver value pursuant
to clause (B) above within 30 days following the first occurrence
of one of the events listed in Section 11.1.2 above, then the
Company shall be obligated to deliver, to the extent necessary
and permitted by applicable law and any agreements or instruments
in effect on the date hereof to which it is a party, upon the
surrender for exercise of a Right and without requiring payment
of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, such number or fractions of Preferred
Shares (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine
in good faith that it is unlikely that sufficient additional
Common Shares could be authorized for issuance upon exercise in
full of the Rights, the 30 day period set forth above may be
extended and re-extended to the extent necessary, but not more
than 90 days following the first occurrence of one of the events
listed in Section 11.1.2 above, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such period as may be extended, the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the second
and/or third sentences of this Section 11.1.3, the Company (x)
shall provide that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order
to seek any authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended as well as a public announcement at
such time as the suspension is no longer in effect. For purposes
of this Section 11.1.3, the value of a Common Share shall be the
current per share market price (as determined pursuant to Section
11.4) on the date of the occurrence of a Trigger Event and the
value of any "common stock equivalent" shall be deemed to have
the same value as the Common Shares on such date. The Board of
Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive Common
Shares upon the exercise of the Rights among holders of Rights
pursuant to this Section 11.1.3. Actions of the Company pursuant
to this Section 11.1.3 must be approved by the vote of a majority
of the Board of Directors (including, following a Trigger Event,
a majority of the Continuing Directors).
11.2. Dilutive Rights Offering. In case the Company shall
fix a record date for the issuance of rights, options or warrants
to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having
the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred stock")) or securities convertible
into Preferred Shares or equivalent preferred stock at a price
per Preferred Share or per share of equivalent preferred stock
(or having a conversion or exercise price per share, if a
security convertible into or exercisable for Preferred Shares or
equivalent preferred stock) less than the current per share
market price of the Preferred Shares (as determined pursuant to
Section 11.4) 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
Preferred Shares and shares of equivalent preferred stock
outstanding on such record date plus the number of Preferred
Shares and shares of equivalent preferred stock which the
aggregate offering price of the total number of Preferred Shares
and/or shares of equivalent preferred stock to be offered (and/or
the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per
share market price and the denominator of which shall be the
number of Preferred Shares and shares of equivalent preferred
stock outstanding on such record date plus the number of
additional Preferred Shares and/or shares of equivalent preferred
stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of stock of the
Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights.
Preferred Shares and shares of equivalent preferred stock owned
by or held for the account of the Company or any Subsidiary 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 which
would then be in effect if such record date had not been fixed.
11.3. Distributions. In case the Company shall fix a
record date for the making of a distribution to all holders of
the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation) of evidences of
indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the
rate of the last regular periodic cash dividend theretofore paid
or, in case regular periodic cash dividends have not theretofore
been paid, at a rate not in excess of 50% of the average net
income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend
payable in Preferred Shares (which dividend, for purposes of this
Agreement, shall be subject to the provisions of Section
11.1.1(A))) or convertible securities, or subscription rights or
warrants (excluding those referred to in Section 11.2), 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 Preferred Shares (as determined pursuant to Section 11.4) on
such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets, securities or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share
and the denominator of which shall be such current per share
market price of the Preferred Shares (as determined pursuant to
Section 11.4); 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 stock of the
Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
11.4. Current Per Share Market Value.
11.4.1. General. For the purpose of any computation
hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11.4.1) on any date
shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
market price of the Security is determined during any period
following the announcement by the issuer of such Security of (i)
a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares or (ii)
any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after
the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the "current per
share market price" shall be appropriately adjusted to reflect
the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted
to trading on any national securities exchange, the last 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 Security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security
selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the
Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day. If the
Security is not publicly held or not so listed or traded, or if
on any such date the Security is not so quoted and no such market
maker is making a market in the Security, "current per share
market price" shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company or, if at
the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors then in office, or if there
are no Continuing Directors, by a nationally recognized
investment banking firm selected by the Board of Directors, which
shall have the duty to make such determination in a reasonable
and objective manner, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for
all purposes.
11.4.2. Preferred Shares. Notwithstanding Section 11.4.1,
for the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined
in the same manner as set forth above in Section 11.4.1 (other
than the last sentence thereof). If the current per share market
price of the Preferred Shares cannot be determined in the manner
described in Section 11.4.1, the "current per share market price"
of the Preferred Shares shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring
after the date of this Agreement) multiplied by the current per
share market price of the Common Shares (as determined pursuant
to Section 11.4.1). If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, or if
on any such date neither the Common Shares nor the Preferred
Shares are so quoted and no such market maker is making a market
in either the Common Shares or the Preferred Shares, "current per
share market price" of the Preferred Shares shall mean the fair
value per share as determined in good faith by the Board of
Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a majority of the
Continuing Directors then in office, or if there are no
Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors of the Company,
which shall have the duty to make such determination in a
reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For purposes of this Agreement, the
"current per share market price" of one one-hundredth of a
Preferred Share shall be equal to the "current per share market
price" of one Preferred Share divided by 100.
11.5. Insignificant Changes. No adjustment in the
Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase
Price. Any adjustments which by reason of this Section 11.5 are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one-hundred thousandth of a Preferred Share or the
nearest one-hundredth of a Common Share or other share or
security, as the case may be.
11.6. Shares Other Than Preferred Shares. If as a result
of an adjustment made pursuant to Section 11.1, the holder of any
Right thereafter exercised shall become entitled to receive any
shares of stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares contained
in Sections 11.1, 11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other
shares.
11.7. Rights Issued Prior to Adjustment. All Rights
originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-
hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
11.8. Effect of Adjustments. Unless the Company shall
have exercised its election as provided in Section 11.9, upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11.2 and 11.3, 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-hundredths of a Preferred
Share (calculated to the nearest one-hundred thousandth of a
Preferred Share) obtained by (i) multiplying (x) the number of
one one-hundredths of a Preferred 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.
11.9. Adjustment in Number of Rights. 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 one one-hundredths of a Preferred
Share issuable 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-hundredths of a
Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-hundredth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the 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 11.9, the Company may, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
representing, subject to Section 14, 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 representing 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 may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date
specified in the public announcement.
11.10. Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and
the number of one one-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
11.11. Par Value Limitations. Before taking any action
that would cause an adjustment reducing the Purchase Price below
one one-hundredth of the then par value, if any, of the Preferred
Shares or other shares of stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable Preferred Shares or other such shares at such
adjusted Purchase Price.
11.12. Deferred Issuance. In any case in which this
Section 11 shall require that an adjustment in the Purchase Price
be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record
date of that number of Preferred Shares and shares of other stock
or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and shares of other stock or
other securities, assets or cash 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 representing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
11.13. Reduction in Purchase Price. 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 it in its sole discretion shall
determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly for cash of
any of the Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
11.14. Company Not to Diminish Benefits of Rights. The
Company covenants and agrees that after the earlier of the Shares
Acquisition Date or Distribution Date it will not, except as
permitted by Section 23, Section 26 or Section 27, take (or
permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action
will substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
11.15. Adjustment of Rights Associated with Common Shares.
Notwithstanding anything contained in this Agreement to the
contrary, in the event that the Company shall at any time after
the date hereof and prior to the Distribution Date (i) declare or
pay any dividend on the outstanding Common Shares payable in
Common Shares, (ii) effect a subdivision or consolidation of the
outstanding Common Shares (by reclassification or otherwise than
by the payment of dividends payable in Common Shares), or
(iii) combine the outstanding Common Shares into a greater or
lesser number of Common Shares, then in any such case, the number
of Rights associated with each Common Share then outstanding, or
issued or delivered thereafter but prior to the Distribution Date
or in accordance with Section 22 shall be proportionately
adjusted so that the number of Rights thereafter associated with
each Common Share following any such event 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. The adjustments provided for in this Section 11.15 shall
be made successively whenever such a dividend is declared or paid
or such a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25. The Rights Agent
shall be fully protected in relying on any such certificate and
on any adjustment therein contained and shall not be deemed to
have knowledge of any such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
13.1. Certain Transactions. In the event that, from and
after the first occurrence of a Trigger Event, directly or
indirectly, (A) the Company shall consolidate with, or merge with
and into, any other Person and the Company shall not be the
continuing or surviving corporation, (B) any Person shall
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock
or other securities of the Company or any other Person or cash or
any other property, or (C) the Company shall sell, exchange,
mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, exchange, mortgage or otherwise
transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company or one or more wholly-
owned Subsidiaries of the Company in one or more transactions
each of which complies with Section 11.14), then, and in each
such case, proper provision shall be made so that (i) each holder
of a Right (other than Rights which have become void pursuant to
Section 11.1.2) shall thereafter have the right to receive, upon
the exercise thereof at a price per Right equal to the then
current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as
subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3,
11.8, 11.9 and 11.12), in accordance with the terms of this
Agreement and in lieu of Preferred Shares or Common Shares, such
number of validly authorized and issued, fully paid, non-
assessable and freely tradable Common Shares of the Principal
Party (as such term is hereinafter defined) not subject to any
liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a
Trigger Event (as subsequently adjusted pursuant to Sections
11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y) dividing that
product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to
Section 11.4) on the date of consummation of such consolidation,
merger, sale or transfer; provided, that the price per Right so
payable and the number of Common Shares of such Principal Party
so receivable upon exercise of a Right shall thereafter be
subject to further adjustment as appropriate in accordance with
Section 11.6 to reflect any events covered thereby occurring in
respect of the Common Shares of such Principal Party after the
occurrence 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; and (iv) such Principal
Party shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of its
Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; provided that, upon
the subsequent occurrence of any consolidation, merger, sale or
transfer of assets or other extraordinary transaction in respect
of such Principal Party, each holder of a Right shall thereupon
be entitled to receive, upon exercise of a Right and payment of
the Purchase Price as provided in this Section 13.1, such cash,
shares, rights, warrants and other property which such holder
would have been entitled to receive had such holder, at the time
of such transaction, owned the Common Shares of the Principal
Party receivable upon the exercise of a Right pursuant to this
Section 13.1, and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the
Rights in accordance with the terms hereof for such cash, shares,
rights, warrants and other property. The Company shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental
agreement confirming that the requirements of this Section 13.1
and Section 13.2 shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer
of assets shall not result in a default by the Principal Party
under this Agreement as the same shall have been assumed by the
Principal Party pursuant to this Section 13.1 and Section 13.2
and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party, at
its own expense, shall
(1) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such
filing and use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
Expiration Date and similarly comply with applicable state
securities laws;
(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the New
York Stock Exchange or on another national securities exchange,
to list or admit to trading (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights
on the New York Stock Exchange or such securities exchange, or,
if the Common Shares of the Principal Party shall not be listed
or admitted to trading on the New York Stock Exchange or a
national securities exchange, to cause the Rights and the
securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or on such other system then
in use;
(3) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the
Principal Party subject to purchase upon exercise of outstanding
Rights.
In case the Principal Party has provision in any of its
authorized securities or in its charter or by-laws or other
instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue
(other than to holders of Rights pursuant to this Section 13), in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or
common stock equivalents of such Principal Party at less than the
then current market price per share thereof (determined pursuant
to Section 11.4) or securities exercisable for, or convertible
into, Common Shares or common stock equivalents of such Principal
Party at less than such then current market price (other than to
holders of Rights pursuant to this Section 13), or (ii) providing
for any special payment, taxes or similar provision in connection
with the issuance of the Common Shares of such Principal Party
pursuant to the provision of Section 13, then, in such event, the
Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.
The Company covenants and agrees that it shall not, at any
time after the Trigger Event, enter into any transaction of the
type described in clauses (A) through (C) of this Section 13.1 if
(i) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any rights,
warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights, (ii) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer or other transaction,
the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13.2
shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the
form or nature of organization of the Principal Party would
preclude or limit the exercisability of the Rights. The
provisions of this Section 13 shall similarly apply to successive
transactions of the type described in clauses (A) through (C) of
this Section 13.1.
13.2. Principal Party. "Principal Party" shall mean:
(i) in the case of any transaction described in (A)
or (B) of the first sentence of Section 13.1: (i) the Person
that is the issuer of the securities into which the Common Shares
are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Shares of which
have the greatest aggregate market value of shares outstanding,
or (ii) if no securities are so issued, (x) the Person that is
the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the
Common Shares of which have the greatest aggregate market value
of shares outstanding or (y) if the Person that is the other
party to the merger does not survive the merger, the Person that
does survive the merger (including the Company if it survives) or
(z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in (C)
of the first sentence in Section 13.1, the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined,
whichever of such Persons is the issuer of Common Shares having
the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the
foregoing clause (A) or (B) of this Section 13.2, if the Common
Shares of such Person are not at such time or have not been
continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a
direct or indirect Subsidiary of another Person the Common Shares
of which are and have been so registered, the term "Principal
Party" shall refer to such other Person, or (2) if such Person is
a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever
of such Persons is the issuer of Common Shares having the
greatest aggregate market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses
(1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint
venture was a Subsidiary of both or all of such joint venturers,
and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its
interest in such Person bears to the total of such interests.
13.3. Approved Acquisitions. Notwithstanding anything
contained herein to the contrary, in the event of any merger or
other acquisition transaction involving the Company pursuant to a
merger or other acquisition agreement between the Company and any
Person (or one or more of such Person's Affiliates or Associates)
which agreement has been approved by the Board of Directors of
the Company prior to any Person becoming an Acquiring Person,
this Agreement and the rights of holders of Rights hereunder
shall be terminated in accordance with Section 7.1.
Section 14. Fractional Rights and Fractional Shares.
14.1. Cash in Lieu of Fractional Rights. The Company
shall not be required to issue fractions of Rights or to
distribute Right Certificates which represent fractional Rights
(except prior to the Distribution Date in accordance with Section
11.15). 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 14.1,
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 shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the current market value of the Rights on such date shall
be the fair value of the Rights as determined in good faith by
the Board of Directors of the Company, or, if at the time of such
determination there is an Acquiring Person, by a majority of the
Continuing Directors then in office, or if there are no
Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors of the Company,
which shall have the duty to make such determination in a
reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
14.2. Cash in Lieu of Fractional Preferred Shares. The
Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise or exchange of
the Rights or to distribute certificates which represent
fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share).
Interests in fractions of Preferred Shares in integral multiples
of one one-hundredth of a Preferred Share may, at the election of
the Company, be represented by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged
as herein provided an amount in cash equal to the same fraction
of the current per share market price of one Preferred Share (as
determined in accordance with Section 14.1) for the Trading Day
immediately prior to the date of such exercise or exchange.
14.3. Cash in Lieu of Fractional Common Shares. The
Company shall not be required to issue fractions of Common Shares
or to distribute certificates which represent fractional Common
Shares upon the exercise or exchange of Rights. In lieu of such
fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a
whole Common Share (as determined in accordance with Section
14.1) for the Trading Day immediately prior to the date of such
exercise or exchange.
14.4. Waiver of Right to Receive Fractional Rights or
Shares. The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise or exchange of a Right,
except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, except the rights of action given to
the Rights Agent under Section 18, are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent
of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce
this Agreement, and may institute and maintain any suit, action
or proceeding against the Company to enforce this Agreement, or
otherwise enforce or act in respect of his right to exercise the
Rights represented 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 shall be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of
any Person (including, without limitation, the Company) subject
to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Shares;
(b) as of and after the Distribution 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 with all
required certifications completed; and
(c) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any
notations of ownership or writing on the Right Certificates
or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. 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 Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 24), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights represented by
such Right Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
instruction, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation, limited liability company or
other entity into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation, limited liability company or other entity resulting
from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation,
limited liability company or other entity succeeding to the
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation, limited liability company
or other entity would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. 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 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.
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 imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
20.1. Legal Counsel. The Rights Agent may consult with
legal counsel selected by it (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance
with such opinion.
20.2. Certificates as to Facts or Matters. Whenever in
the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of
Directors, the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer, the
Secretary or any Assistant Treasurer or Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
20.3. Standard of Care. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
20.4. Reliance on Agreement and Right Certificates. 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 as to 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.
20.5. No Responsibility as to Certain Matters. The Rights
Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any 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 change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 11.1.2) or any adjustment required under the
provisions of Sections 3, 11, 13, 23 or 27 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
represented by Right Certificates after actual notice of any such
change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when so
issued, be validly authorized and issued, fully paid and
nonassessable.
20.6. Further Assurance by Company. 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.
20.7. Authorized Company Officers. The Rights Agent is
hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one
of the Chairman of the Board of Directors, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its
duties under this Agreement, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or for any delay
in acting while waiting for these instructions. Any application
by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with
respect to its duties or obligations under this Agreement and the
date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be
liable to the Company for any action taken by, or omission of,
the Rights Agent in accordance with a proposal included in any
such application on or after the date specified therein (which
date shall not be less than three business days after the date
any such officer actually receives such application, unless any
such officer shall have consented in writing to an earlier date)
unless, prior to taking of any such action (or the effective date
in the case of omission), the Rights Agent shall have received
written instructions in response to such application specifying
the action to be taken or omitted.
20.8. Freedom to Trade in Company Securities. The Rights
Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
20.9. Reliance on Attorneys and Agents. 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, omission, default,
neglect or misconduct of any such attorneys or agents or for any
loss to the Company resulting from any such act, omission,
default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
20.10. Incomplete Certificate. If, with respect to any
Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate contained in the form of assignment
or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify
the holder is not an Acquiring Person (or an Affiliate or
Associate thereof), the Rights Agent shall not take any further
action with respect to such requested exercise or transfer
without first consulting with the Company.
20.11. Rights Holders List. At any time and from time to
time after the Distribution Date, upon the request of the
Company, the Rights Agent shall promptly deliver to the Company a
list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the holders
of record of Rights.
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/or Preferred Shares, as applicable, by registered or
certified mail. Following the Distribution Date, the Company
shall promptly notify the holders of the Right Certificates by
first-class mail of any such resignation. 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/or Preferred Shares, as applicable, 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 resigning, removed, or incapacitated Rights Agent
shall remit to the Company, or to any successor Rights Agent
designated by the Company, all books, records, funds,
certificates or other documents or instruments of any kind then
in its possession which were acquired by such resigning, removed
or incapacitated Rights Agent in connection with its services as
Rights Agent hereunder, and shall thereafter be discharged from
all duties and obligations hereunder. Following notice of such
removal, resignation or incapacity, the Company shall appoint a
successor to such 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 Right
Certificate for inspection by the Company), then the registered
holder of any Right Certificate or the Rights Agent may apply to
any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the
State of New York or the State of California (or any other state
of the United States so long as such corporation is authorized to
do business as a banking institution in the State of New York or
California) in good standing, having an office in the State of
New York or the State of California, which is authorized under
such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by Federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $10 million.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares and/or
Preferred Shares, as applicable, and, following the Distribution
Date, 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 representing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price 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, in connection with the issuance or sale
of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to Common
Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon exercise, conversion
or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right
Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Right Certificate would be
issued, (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof and (iii) at the time of a
determination by the Board of Directors to cause the Company to
issue a Right Certificate under clause (b) above, there must be
Continuing Directors then in office and any such determination
shall require the approval of at least a majority of such
Continuing Directors.
Section 23. Redemption.
Section 23.1. Right to Redeem. The Company may, at its
option, at any time prior to a Trigger Event, redeem all but not
less than all of the then outstanding Rights at a redemption
price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend, recapitalization or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"),
and the Company may, at its option, pay the Redemption Price in
Common Shares (based on the "current per share market price,"
determined pursuant to Section 11.4, of the Common Shares at the
time of redemption), cash or any other form of consideration
deemed appropriate by the Board of Directors. The redemption of
the Rights by the Company may be made effective at such time, on
such basis and subject to such conditions as the Board of
Directors in its sole discretion may establish.
Section 23.2. Redemption Procedures. Immediately upon the
action of the Board of Directors of the Company ordering the
redemption of the Rights (or at such later time as the Board of
Directors may establish for the effectiveness of such
redemption), and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. The Company
shall promptly give public notice of such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. The
Company shall promptly give, or cause the Rights Agent to give,
notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of redemption shall state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 27, and
other than in connection with the purchase, acquisition or
redemption of Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose at any time after the earlier of the Shares
Acquisition Date and the Distribution Date (a) to pay any
dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders
of Preferred Shares (other than a regular periodic cash dividend
at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular
periodic cash dividends have not theretofore been paid, at a rate
not in excess of 50% of the average net income per share of the
Company for the four quarters ended immediately prior to the
payment of such dividends, or a stock dividend on, or a
subdivision, combination or reclassification of the Common
Shares), or (b) to offer to the holders of Preferred Shares
rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), or (d) 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 50% or more of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person (other than pursuant to a
merger or other acquisition agreement of the type described in
Section 1.3(ii)(A)(z)), or (e) to effect the liquidation,
dissolution or winding up of the Company, or (f) to declare or
pay any dividend on the Common Shares payable in Common Shares or
to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares), then, in each such case, the
Company shall give to the Rights Agent and to each holder of a
Right Certificate, in accordance with Section 25, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights 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 Preferred Shares and/or Common
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 (a) or (b)
above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares
and/or Common Shares, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13
shall occur, 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, in accordance with Section
25, a notice of the occurrence of such event, which notice shall
describe the event and the consequences of the event to holders
of Rights under Section 11.1.2 and Section 13, and (ii) all
references in this Section 24 to Preferred Shares shall be deemed
thereafter to refer to Common Shares and/or, if appropriate,
other securities.
Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient
notice to the holders of securities of the Company, including the
Rights, for purposes of this Agreement and no other notice need
be given.
Section 25. 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:
Realty Income Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Secretary
Subject to the provisions of Section 21 and Section 24, 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:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Shareholder Services Division
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 (or, prior to the Distribution Date, to the
holder of any certificate representing Common Shares) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. For so long as
the Rights are then redeemable, the Company may in its sole and
absolute discretion, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement
in any respect without the approval of any holders of Rights or
Common Shares. From and after the time that the Rights are no
longer redeemable, the Company may, and the Rights Agent shall,
if the Company so directs, from time to time supplement or amend
this Agreement without the approval of any holders of Rights (i)
to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, (ii) to shorten or lengthen any time
period hereunder (which shortening or lengthening, after the time
a Person becomes an Acquiring Person, shall be effective only if
there are Continuing Directors and shall require the approval of
at least a majority of such Continuing Directors) or (iii) to
make any other changes or provisions in regard to matters or
questions arising hereunder which the Company may deem necessary
or desirable, including but not limited to extending the Final
Expiration Date; provided, however, that no such supplement or
amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), and no such supplement or
amendment may cause the Rights again to become redeemable or
cause this Agreement again to become amendable other than in
accordance with this sentence; provided further, that the right
of the Board of Directors to extend the Distribution Date shall
not require any amendment or supplement hereunder. 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 26, the Rights Agent
shall execute such supplement or amendment. Without limiting the
foregoing, at any time prior to such time as any Person becomes
an Acquiring Person, the Company and the Rights Agent may amend
this Agreement to lower the thresholds set forth in Sections 1.1
and 3.1 to not less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any
Person (other than an Exempt Person) and (ii) 10%.
Notwithstanding anything herein to the contrary, any supplement
or amendment to this Agreement, after the time that a Person
becomes an Acquiring Person shall require the affirmative vote of
a majority of the Continuing Directors.
Section 27. Exchange.
27.1. Exchange of Common Shares for Rights. The Company
may, at its option, at any time after the occurrence of a Trigger
Event, exchange Common Shares for all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 11.1.2) by exchanging at an exchange ratio of that number
of Common Shares having an aggregate value equal to the Spread
(with such value being based on the current per share market
price (as determined pursuant to Section 11.4) on the date of the
occurrence of a Trigger Event) per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such amount per Right being
hereinafter referred to as the "Exchange Consideration").
Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any
Acquiring Person shall have become the Beneficial Owner of 50% or
more of the Common Shares then outstanding. From and after the
occurrence of an event specified in Section 13.1, any Rights that
theretofore have not been exchanged pursuant to this Section 27.1
shall thereafter be exercisable only in accordance with Section
13 and may not be exchanged pursuant to this Section 27.1. The
exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
27.2. Exchange Procedures. Immediately upon the action of
the Board of Directors of the Company ordering the exchange for
any Rights pursuant to Section 27.1 and without any further
action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such
Rights shall be to receive the Exchange Consideration. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange
of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than the Rights that have become
void pursuant to the provisions of Section 11.1.2) held by each
holder of Rights.
27.3. Insufficient Shares. The Company may at its option
substitute, and, in the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit an exchange of Rights for Common Shares as
contemplated in accordance with this Section 27, the Company
shall substitute to the extent of such insufficiency, for each
Common Share that would otherwise be issuable upon exchange of a
Right, a number of Preferred Shares or fraction thereof (or
equivalent preferred stock, as such term is defined in Section
11.2) such that the current per share market price (determined
pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal
to the current per share market price of one Common Share
(determined pursuant to Section 11.4) as of the date of such
exchange.
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. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person or corporation
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
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 Distribution Date, the Common Shares).
Section 30. Determination and Actions by the Board of
Directors. The Board of Directors of the Company (in conjunction
with the Continuing Directors as specifically provided in this
Agreement) or, where applicable as specifically provided in this
Agreement, the Continuing Directors shall have the exclusive
power and authority to administer this Agreement and to exercise
the rights and powers specifically granted to the Board of
Directors of the Company (in conjunction with the Continuing
Directors, as applicable) or the Continuing Directors or to the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the
Rights or amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing)
that are done or made by the Board of Directors of the Company or
the Continuing Directors, as applicable, in good faith shall (x)
be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights, as such, and all other parties,
and (y) not subject the Board of Directors or the Continuing
Directors, as applicable, to any liability to the holders of the
Rights.
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.
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 Maryland and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State; provided, however, that all of the
rights, responsibilities and obligations of the Rights Agent
shall be governed and construed in accordance with the laws of
the State of New York.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Heading. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 35. REIT Status. Notwithstanding anything in this
Agreement to the contrary, no Right shall be exercisable if the
exercise or exercisability of such Right would result in the
Company ceasing to be treated as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
REALTY INCOME CORPORATION,
a Maryland corporation
By:____________________________
Name:
Title:
THE BANK OF NEW YORK
By:____________________________
Name:
Title:
EXHIBIT A
REALTY INCOME CORPORATION
ARTICLES SUPPLEMENTARY
CLASS A JUNIOR PARTICIPATING PREFERRED STOCK
-------------------------
Realty Income Corporation, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland, pursuant to Sections 2-
105(a)(9) and 2-208(2) of the Maryland General Corporation Law
(the "MGCL") that:
FIRST: Under a power contained in Section 6.3 of the
charter of the Corporation (the "Charter"), the Board of
Directors, as required by Section 2-208(a) of the MGCL, at a
meeting duly called and held on June 10, 1998, has classified and
designated 1,000,000 unissued shares of Preferred Stock of the
Corporation, $1.00 par value per share, as shares of Class A
Junior Participating Preferred Stock, with the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption as follows,
which upon any restatement of the Charter shall be made part of
Article VI of the Charter, with any necessary or appropriate
changes to the enumeration or lettering of the provisions hereof:
SECOND: The class of Preferred Stock of the Corporation
created by the resolutions duly adopted by the Board of Directors
of the Corporation and referred to in Article FIRST of these
Articles Supplementary shall have the following designations,
number of shares, preferences, conversion and other rights,
voting powers, restrictions and limitations as to distributions,
qualifications, terms and conditions of redemptions and other
terms and conditions:
CLASS A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. Designation and Amount. The shares of such
series shall be designated as "Class A Junior Participating
Preferred Stock" (the "Class A Preferred Stock") and the number
of shares constituting the Class A Preferred Stock shall be one
million (1,000,000). Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Class A
Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the
Corporation convertible into Class A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any class or series of stock of this
Corporation ranking prior and superior to the Class A Preferred
Stock with respect to dividends, the holders of shares of Class A
Preferred Stock, in preference to the holders of Common Stock,
par value $1.00 per share (the "Common Stock"), of the
Corporation, and of any other stock ranking junior to the Class A
Preferred Stock, shall be entitled to receive, when, as and if
authorized by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on
the first day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Class A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Class A Preferred Stock.
In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of
Class A Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Class A Preferred Stock as provided in
paragraph (A) of this Section 2 immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend 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 Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $1.00 per share on the Class A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Class A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Class A
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares
of Class A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders
of shares of Class A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the
payment thereof.
(D) In determining whether a dividend or distribution
(other than upon voluntary or involuntary liquidation), by
dividend, redemption or other acquisition of shares or otherwise,
is permitted under the Maryland General Corporation Law, amounts
that would be needed, if the Corporation were to be dissolved at
the time of the dividend or distribution, to satisfy the
preferential rights upon dissolution of holders of the Class A
Preferred Stock shall not be added to the Corporation's total
liabilities.
Section 3. Voting Rights. The holders of shares of Class
A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Class A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the number of votes per share to which holders of shares of
Class A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, or in any other
Articles Supplementary creating a series of Preferred Stock or
any similar stock, the holders of shares of Class A Preferred
Stock and the holders of shares of Common Stock and any other
shares of stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Class A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Class A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Class A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Class A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Class A Preferred Stock, except
dividends paid ratably on the Class A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Class A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (both
as to dividends and upon dissolution, liquidation or winding
up) to the Class A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Class A Preferred Stock, or any
shares of stock ranking on a parity with the Class A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Class A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the charter, or in
any other Articles Supplementary creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A)
Upon any liquidation, dissolution or winding up of the
Corporation, voluntary or otherwise no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Class A Preferred Stock unless, prior thereto, the holders of
shares of Class A Preferred Stock shall have received an amount
per share (the "Class A Liquidation Preference") equal to $100
per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of Class A
Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or
(2) to the holders of shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Class A Preferred Stock, except distributions made
ratably on the Class A Preferred Stock and all such parity stock
in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the aggregate amount to
which holders of shares of Class A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Class A
Liquidation Preference and the liquidation preferences of all
other classes and series of stock of the Corporation, if any,
that rank on a parity with the Class A Preferred Stock in respect
thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Class A Preferred Stock
and the holders of such parity shares in proportion to their
respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger or consolidation
of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6.
Section 7. Consolidation, Merger, etc. 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
each share of Class A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of
shares of Class A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Class A Preferred
Stock shall not be redeemable by the Company.
Section 9. Rank. The Class A Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up, junior to all
series of any other class of the Corporation's Preferred Stock,
except to the extent that any such other series specifically
provides that it shall rank on a parity with or junior to the
Class A Preferred Stock.
Section 10. Amendment. At any time any shares of Class A
Preferred Stock are outstanding, the charter shall not be amended
in any manner which would materially alter or change the powers,
preferences or special rights of the Class A Preferred Stock, as
set forth herein, so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Class A Preferred Stock, voting separately
as a single class.
Section 11. Fractional Shares. Class A Preferred Stock
may be issued in fractions of a share that shall entitle the
holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Class A Preferred Stock.
Section 12. Restrictions on Ownership and Transfer to
Preserve Tax Benefit.
(A) Definitions. For the purposes of this Section 12 of
these Articles Supplementary, the following terms shall have the
following meanings:
"Beneficial Ownership" shall mean ownership of Class A
Preferred Stock by a Person (whether the interest in Class A
Preferred Stock is held directly or indirectly, including by
a nominee) who is or would be treated as an owner of such
Class A Preferred Stock either actually or constructively
through the application of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have the correlative meanings.
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to Section
12(C)(6) of these Articles Supplementary.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
"Constructive Ownership" shall mean ownership of Class
A Preferred Stock by a Person (whether the interest in Class
A Preferred Stock is held directly or indirectly, including
by a nominee) who is or would be treated as an owner of such
Class A Preferred Stock either actually or constructively
through the application of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the
correlative meanings.
"IRS" means the United States Internal Revenue Service.
"Market Price" shall mean the last sales price of the
Class A Preferred Stock reported on the New York Stock
Exchange on the trading day immediately preceding the
relevant date, or if the Class A Preferred Stock is not then
traded on the New York Stock Exchange, the last
reported sales price of the Class A Preferred Stock on the
trading day immediately preceding the relevant date as
reported on any exchange or quotation system over which the
Class A Preferred Stock may be traded, or if the Class A
Preferred Stock is not then traded over any exchange or
quotation system, then the fair market value of the Class A
Preferred Stock on the relevant date as determined in good
faith by the Board of Directors of the Corporation.
"MGCL" shall mean the Maryland General Corporation Law,
as amended from time to time, and any successor statute
hereafter enacted.
"Ownership Limit" shall mean 9.8% (by value or by
number of shares, whichever is more restrictive) of the
outstanding shares of Class A Preferred Stock of the
Corporation.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust
(including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently
set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association,
private foundation within the meaning of Section 509(a) of
the Code, joint stock company or other entity; but does not
include an underwriter acting in a capacity as such in a
public offering of shares of Class A Preferred Stock
provided that the ownership of such shares of Class A
referred Stock by such underwriter would not result in the
Corporation being "closely held" within the meaning of
Section 856(h) of the Code, or otherwise result in the
Corporation failing to qualify as a REIT.
"Purported Beneficial Transferee" shall mean, with
respect to any purported Transfer (or other event) which
results in a transfer to a Trust, as provided in Section
12(B)(2) of these Articles Supplementary, the Person who
would have acquired or owned the beneficial interest in such
shares of Class A Preferred Stock if the purported Transfer
had been valid under Section 12(B)(1) of the Articles
Supplementary.
"Purported Record Transferee" shall mean, with respect
to any purported Transfer (or other event) which results in
a transfer to a Trust, as provided in Section 12(B)(2) of
these Articles Supplementary, the Person who would have been
the record holder of the shares of Class A Preferred Stock
if such Transfer had been valid under Section 12(B)(1) of
these Articles Supplementary.
"REIT" shall mean a real estate investment trust under
Sections 856 through 860 of the Code, and, for purposes of
taxation of the Company under applicable state law,
analogous provisions of the law of such state.
"Restriction Termination Date" shall mean the first day
after the date hereof on which the Board of Directors of the
Corporation determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to,
qualify as a REIT.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Class A Preferred
Stock, including (i) the granting of any option or entering
into any agreement for the sale, transfer or other
disposition of Class A Preferred Stock or (ii) the sale,
transfer, assignment or other disposition of any securities
or rights convertible into or exchangeable for Class A
Preferred Stock, whether voluntary or involuntary,
whether such transfer has occurred of record or beneficially
or Beneficially or Constructively (including but not limited
to transfers of interests in other entities which result in
changes in Beneficial or Constructive Ownership of Class A
Preferred Stock), and whether such transfer has occurred by
operation of law or otherwise.
"Trust" shall mean each of the trusts provided for in
Section 12(C) of these Articles Supplementary.
"Trustee" shall mean any Person, unaffiliated with the
Corporation, a Purported Beneficial Transferee, or a
Purported Record Transferee, that is appointed by the
Corporation to serve as trustee of a Trust.
(B) Restriction on Ownership and Transfers.
(1) Prior to the Restriction Termination Date:
(a) except as provided in Section 12(I) of these
Articles Supplementary, no Person shall Beneficially Own shares
of Class A Preferred Stock in excess of the Ownership Limit;
(b) except as provided in Section 12(I) of these
Articles Supplementary, no Person shall Constructively Own shares
of Class A Preferred Stock, in excess of the Ownership Limit;
(c) no Person shall Beneficially Own or
Constructively Own shares of Class A Preferred Stock which,
taking into account any other capital stock of the Corporation
Beneficially Owned or Constructively Owned by such Person, would
result in the Corporation being "closely held" within the meaning
of Section 856(h) of the Code (without regard to whether the
ownership interest is held during the last half of a taxable
year), or otherwise failing to qualify as a REIT (including but
not limited to ownership that would result in the Corporation
owning (actually or Constructively) an interest in a tenant that
is described in Section 856(d)(2)(B) of the Code if the income
derived by the Corporation (either directly or indirectly through
one or more partnerships) from such tenant would cause the
Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code) or analogous
provisions of state law.
(2) If, prior to the Restriction Termination Date,
any Transfer (whether or not such Transfer is the result of a
transaction entered into through the facilities of the New York
Stock Exchange ("NYSE")) or other event occurs that, if
effective, would result in any Person Beneficially Owning or
Constructively Owning shares of Class A Preferred Stock in
violation of Section 12(B)(1) of these Articles Supplementary,
(1) then that number of shares of Class A Preferred Stock that
otherwise would cause such Person to violate Section 12(B)(1) of
these Articles Supplementary (rounded up to the nearest whole
share) shall be automatically transferred to a Trust for the
benefit of a Charitable Beneficiary, as described in Section
12(C), effective as of the close of business on the business day
prior to the date of such Transfer or other event, and such
Person shall thereafter have no rights in such shares or (2) if,
for any reason, the transfer to the Trust described in clause (1)
of this sentence is not automatically effective as provided
therein to prevent any Person from Beneficially Owning or
Constructively Owning shares of Class A Preferred Stock in
violation of Section 12(B)(1) of these Articles Supplementary,
then the Transfer of that number of shares of Class A Preferred
Stock that otherwise would cause any Person to violate Section
12(b)(1) shall be void ab initio, and such Person shall have no
rights in such shares.
(3) Notwithstanding any other provisions contained
herein, prior to the Restriction Termination Date, any Transfer
of Class A Preferred Stock (whether or not such Transfer is the
result of a transaction entered into through the facilities of
the NYSE) that, if effective, would result in the capital stock
of the Corporation being beneficially owned by less than 100
Persons (determined without reference to any rules of
attribution) shall be void ab initio, and the intended transferee
shall acquire no rights in such Class A Preferred Stock.
(C) Transfers of Class A Preferred Stock in Trust.
(1) Upon any purported Transfer or other event
described in Section 12(B)(2)of these Articles Supplementary,
then that number of shares of Class A Preferred Stock that
otherwise would cause a violation of Section 12(B)(1) (rounded up
to the nearest whole share) shall be deemed to have been
automatically transferred to the Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more
Charitable Beneficiaries. Such transfer to the Trustee shall be
deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that
results in a transfer to the Trust pursuant to Section 12(B)(2).
The Trustee shall be appointed by the Corporation and shall be a
Person unaffiliated with the Corporation, any Purported
Beneficial Transferee, or any Purported Record Transferee. Each
Charitable Beneficiary shall be designated by the Corporation as
provided in Section 12(C)(6) of these Articles Supplementary.
(2) Class A Preferred Stock held by the Trustee shall
be issued and outstanding Class A Preferred Stock of the
Corporation. The Purported Beneficial Transferee or Purported
Record Transferee shall have no rights in the shares of Class A
Preferred Stock held by the Trustee. The Purported Beneficial
Transferee or Purported Record Transferee shall not benefit
economically from ownership of any shares held in trust by the
Trustee, shall have no rights to dividends and shall not possess
any rights to vote or other rights attributable to the shares of
Class A Preferred Stock held in the Trust.
(3) The Trustee shall have all voting rights and
rights to dividends with respect to Class A Preferred Stock held
in the Trust, which rights shall be exercised for the exclusive
benefit of the Charitable Beneficiary. Any dividend or
distribution paid prior to the discovery by the Corporation that
shares of Class A Preferred Stock have been transferred to the
Trustee shall be paid by the recipient thereof to the Trustee
upon demand, and any dividend or distribution declared but unpaid
shall be paid when due to the Trustee with respect to such Class
A Preferred Stock. Any dividends or distributions so paid over
to the Trustee shall be held in trust for the Charitable
Beneficiary. The Purported Record Transferee and Purported
Beneficial Transferee shall have no voting rights with respect to
the Class A Preferred Stock held in the Trust and, subject to
Maryland law, effective as of the date the Class A Preferred
Stock has been transferred to the Trustee, the Trustee shall have
the authority (at the Trustee's sole discretion) (i) to rescind
as void any vote cast by a Purported Record Transferee with
respect to such Class A Preferred Stock prior to the discovery by
the Corporation that the Class A Preferred Stock has been
transferred to the Trustee and (ii) to recast such vote in
accordance with the desires of the Trustee acting for the benefit
of the Charitable Beneficiary; provided, however, that if the
Corporation has already taken irreversible corporate action, then
the Trustee shall not have the authority to rescind and recast
such vote. Notwithstanding any other provision of these Articles
Supplementary to the contrary, until the Corporation has received
notification that the Class A Preferred Stock has been
transferred into a Trust, the Corporation shall be entitled to
rely on its share transfer and other stockholder records for
purposes of preparing lists of stockholders entitled to vote at
meetings, determining the validity and authority of proxies and
otherwise conducting votes of stockholders.
(4) Within 20 days of receiving notice from the
Corporation that shares of Class A Preferred Stock have been
transferred to the Trust, the Trustee of the Trust shall sell the
shares of Class A Preferred Stock held in the Trust to a Person,
designated by the Trustee, whose ownership of the shares of Class
A Preferred Stock will not violate the ownership limitations set
forth in Section 12(B)(1). Upon such sale, the interest of the
Charitable Beneficiary in the shares of Class A Preferred Stock
sold shall terminate and the Trustee shall distribute the net
proceeds of the sale to the Purported Record Transferee and to
the Charitable Beneficiary as provided in this Section 12(C)(4).
The Purported Record Transferee shall receive the lesser of (1)
the price paid by the Purported Record Transferee or the
Purported Beneficial Transferee for the shares of Class A
Preferred Stock in the transaction that resulted in such transfer
to the Trust or, to the extent that neither the Purported Record
Transferee nor the Purported Beneficial Transferee gave fair
value for such shares of Class A Preferred Stock, the Market
Price of such shares of Class A Preferred Stock on the day of the
event which resulted in the transfer of the shares of Class A
Preferred Stock to the Trust and (2) the price per share received
by the Trustee (net of any commissions and other expenses of
sale) from the sale or other disposition of the shares of Class A
Preferred Stock held in the Trust. Any net sales proceeds in
excess of the amount payable to the Purported Record Transferee
shall be immediately paid to the Charitable Beneficiary together
with any dividends or other distributions thereon. If, prior to
the discovery by the Corporation that shares of such Class A
Preferred Stock have been transferred to the Trustee, such shares
of Class A Preferred Stock are sold by a Purported Record
Transferee then (i) such shares of Class A Preferred Stock shall
be deemed to have been sold on behalf of the Trust and (ii) to
the extent that the Purported Record Transferee or the Purported
Beneficial Transferee received an amount for such shares of Class
A Preferred Stock that exceeds the amount that such Purported
Record Transferee or the Purported Beneficial Transferee was
entitled to receive pursuant to this Section 12(C)(4), such
excess shall be paid to the Trustee upon demand.
(5) Class A Preferred Stock transferred to the
Trustee shall be deemed to have been offered for sale to the
Corporation, or its designee, at a price per share equal to the
lesser of (i) the price paid by the Purported Record Transferee
or the Purported Beneficial Transferee for the shares of Class A
Preferred Stock in the transaction that resulted in such transfer
to the Trust or, if neither the Purported Record Transferee or
the Purported Beneficial Transferee gave value for the Market
Price of such shares of Class A Preferred Stock on the day of the
event which resulted in the transfer of such shares of Class A
Preferred Stock to the Trust, and (ii) the Market Price on the
date the Corporation, or its designee, accepts such offer. The
Corporation shall have the right to accept such offer until the
Trustee has sold the shares of Class A Preferred Stock held in
the Trust pursuant to Section 12(C)(4). Upon such a sale to the
Corporation, the interest of the Charitable Beneficiary in the
shares of Class A Preferred Stock sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the
Purported Record Transferee and any dividends or other
distributions held by the Trustee with respect to such Class A
Preferred Stock shall thereupon be paid to the Charitable
Beneficiary.
(6) By written notice to the Trustee, the Corporation
shall designate one or more nonprofit organizations to be the
Charitable Beneficiary of the interest in the Trust such that (i)
the Class A Preferred Stock held in the Trust would not violate
the restrictions set forth in Section 12(B)(1) in the hands of
such Charitable Beneficiary and (ii) each Charitable Beneficiary
is an organization described in Sections 170(b)(1)(A), 170(c)(2)
or 501(c)(3) of the Code.
(D) Remedies For Breach. If the Board of Directors or a
committee thereof (or other designees if permitted under the
MGCL) shall at any time determine in good faith that a Transfer
or other event has taken place in violation of Section 12(B) of
these Articles Supplementary or that a Person intends to acquire,
has attempted to acquire or may acquire beneficial ownership
(determined without reference to any rules of attribution),
Beneficial Ownership or Constructive Ownership of any shares of
Class A Preferred Stock of the Corporation in violation of
Section 12(B) of these Articles Supplementary, the Board of
Directors or a committee thereof (or other designees if permitted
under the MGCL) shall take such action as it deems advisable to
refuse to give effect or to prevent such Transfer, including, but
not limited to, causing the Corporation to redeem shares of Class
A Preferred Stock, refusing to give effect to such Transfer on
the books of the Corporation or instituting proceedings to enjoin
such Transfer; provided, however, that any Transfers (or, in the
case of events other than a Transfer, ownership or Constructive
Ownership or Beneficial Ownership) in violation of Section
12(B)(1) of these Articles Supplementary, shall automatically
result in the transfer to a Trust as described in Section
12(B)(2) and any Transfer in violation of Section 12(B)(3) shall
automatically be void ab initio irrespective of any action (or
non-action) by the Board of Directors.
(E) Notice of Restricted Transfer. Any Person who
acquires or attempts to acquire shares of Class A Preferred Stock
in violation of Section 12(B) of these Articles Supplementary, or
any Person who is a Purported Beneficial Transferee or Purported
Record Transferee such that an automatic transfer to a Trust
results under Section 12(B)(2) of these Articles Supplementary,
shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information
as the Corporation may request in order to determine the effect,
if any, of such Transfer or attempted Transfer on the
Corporation's status as a REIT.
(F) Owners Required To Provide Information. Prior to the
Restriction Termination Date each Person who is a beneficial
owner or Beneficial Owner or Constructive Owner of Class A
Preferred Stock and each Person (including the shareholder of
record) who is holding Class A Preferred Stock for a beneficial
owner or Beneficial Owner or Constructive Owner shall provide to
the Corporation such information that the Corporation may
request, in good faith, in order to determine the Corporation's
status as a REIT.
(G) Remedies Not Limited. Nothing contained in these
Articles Supplementary (but subject to Section 12(M) of these
Articles Supplementary) shall limit the authority of the Board of
Directors to take such other action as it deems necessary or
advisable to protect the Corporation and the interests of its
shareholders by preservation of the Corporation's status as a
REIT.
(H) Ambiguity. In the case of an ambiguity in the
application of any of the provisions of this Section 12 of these
Articles Supplementary, including any definition contained in
Section 12(A), the Board of Directors shall have the power to
determine the application of the provisions of this Section 12
with respect to any situation based on the facts known to it
(subject, however, to the provisions of Section 12(M) of these
Articles Supplementary). In the event Section 12 requires an
action by the Board of Directors and these Articles Supplementary
fail to provide specific guidance with respect to such action,
the Board of Directors shall have the power to determine the
action to be taken so long as such action is not contrary to the
provisions of Section 12. Absent a decision to the contrary by
the Board of Directors (which the Board may make in its sole and
absolute discretion), if a Person would have (but for the
remedies set forth in Section 12(B)) acquired Beneficial or
Constructive Ownership of Class A Preferred Stock in violation of
Section 12(B)(1), such remedies (as applicable) shall apply first
to the shares of Class A Preferred Stock which, but for such
remedies, would have been actually owned by such Person, and
second to shares of Class A Preferred Stock which, but for such
remedies, would have been Beneficially Owned or Constructively
Owned (but not actually owned) by such Person, pro rata among the
Persons who actually own such shares of Class A Preferred Stock
based upon the relative number of the shares of Class A Preferred
Stock held by each such Person.
(I) Exceptions.
(1) Subject to Section 12(B)(1)(c), the Board of
Directors, in its sole discretion, may exempt a Person from the
limitation on a Person Beneficially Owning Class A Preferred
Stock in excess of the Ownership Limit if the Board of Directors
obtains such representations and undertakings from such Person as
are reasonably necessary to ascertain that no individual's
Beneficial Ownership or Constructive Ownership of such Class A
Preferred Stock will violate the Ownership Limit or that any such
violation will not cause the Corporation to fail to qualify as a
REIT under the Code, and agrees that any violation of such
representations or undertaking (or other action which is contrary
to the restrictions contained in Section 12(B) of these Articles
Supplementary) or attempted violation will result in such Class A
Preferred Stock being transferred to a Trust in accordance with
Section 12(B)(2) of these Articles Supplementary.
(2) Subject to Section 12(B)(1)(c), the Board of
Directors, in its sole discretion, may exempt a Person from the
limitation on a Person Constructively Owning Class A Preferred
Stock in excess of the Ownership Limit if such Person does not
and represents that it will not own, actually or Constructively,
an interest in a tenant of the Corporation (or a tenant of any
entity owned in whole or in part by the Corporation) that would
cause the Corporation to own, actually or Constructively more
than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the
Code) in such tenant and the Corporation obtains such
representations and undertakings from such Person as are
reasonably necessary to ascertain this fact and agrees that any
violation or attempted violation will result in such Class A
Preferred Stock being transferred to a Trust in accordance with
Section 12(B)(2) of these Articles Supplementary.
Notwithstanding the foregoing, the inability of a Person to make
the certification described in this Section 12(I)(2) shall not
prevent the Board of Directors, in its sole discretion, from
exempting such Person from the limitation on a Person
Constructively Owning Class A Preferred Stock in excess of the
Ownership Limit if the Board of Directors determines that the
resulting application of Section 856(d)(2)(B) of the Code would
affect the characterization of less than 0.5% of the gross income
(as such term is used in Section 856(c)(2) of the Code and
analogous provisions of applicable state law) of the Corporation
in any taxable year, after taking into account the effect of this
sentence with respect to all other Class A Preferred Stock to
which this sentence applies.
(3) Prior to granting any exception pursuant to
Sections 12(I)(1) or (2) of these Articles Supplementary, the
Board of Directors may require a ruling from the Internal Revenue
Service, or an opinion of counsel, in either case in form and
substance satisfactory to the Board of Directors in its sole
discretion, as it may deem necessary or advisable in order to
determine or ensure the Corporation's status as a REIT.
(J) Preemptive Rights. No holder of shares of Class A
Preferred Stock shall have any preemptive or preferential right
to subscribe or to purchase any additional shares of any class,
or any bonds or convertible securities of any nature.
(K) Legend. Each certificate for Class A Preferred Stock
shall bear substantially the following legends:
Class of Stock
"THE CORPORATION IS AUTHORIZED TO ISSUE CAPITAL STOCK OF
MORE THAN ONE CLASS, CONSISTING OF COMMON STOCK AND ONE OR
MORE CLASSES OF PREFERRED STOCK. THE BOARD OF DIRECTORS IS
AUTHORIZED TO DETERMINE THE PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF ANY CLASS OF THE PREFERRED STOCK BEFORE
THE ISSUANCE OF SHARES OF SUCH CLASS OF PREFERRED STOCK.
THE CORPORATION WILL FURNISH TO ANY STOCKHOLDER, ON REQUEST
AND WITHOUT CHARGE, A FULL STATEMENT OF THE INFORMATION
REQUIRED BY SECTION 2-211(B) OF THE CORPORATIONS AND
ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH
RESPECT TO THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION
AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS
AS TO DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS AND
TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH
CLASS WHICH THE CORPORATION HAS THE AUTHORITY TO ISSUE AND,
IF THE CORPORATION IS AUTHORIZED TO ISSUE ANY PREFERRED OR
SPECIAL CLASS AND SERIES, (I) THE DIFFERENCES IN THE
RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH
CLASS OR SERIES TO THE EXTENT SET, AND (II) THE AUTHORITY OF
THE BOARD OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF
SUBSEQUENT CLASSES OR SERIES. THE FOREGOING SUMMARY DOES NOT
PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE CHARTER OF THE CORPORATION
(THE "CHARTER"), A COPY OF WHICH WILL BE SENT WITHOUT CHARGE
TO EACH STOCKHOLDER WHO SO REQUESTS. REQUESTS FOR SUCH
WRITTEN STATEMENT MAY BE DIRECTED TO XXXXXXX X. XXXXXXXX,
THE SECRETARY OF THE CORPORATION, AT THE CORPORATION'S
PRINCIPAL OFFICE.
Restriction on Ownership and Transfer
THE SHARES OF CLASS A PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND
CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"). SUBJECT TO CERTAIN FURTHER
RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE
ARTICLES SUPPLEMENTARY FOR THE CLASS A PREFERRED STOCK, (I)
NO PERSON MAY BENEFICIALLY OWN SHARES OF THE CORPORATION'S
CLASS A PREFERRED STOCK IN EXCESS OF 9.8% (BY VALUE OR BY
NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE
OUTSTANDING CLASS A PREFERRED STOCK OF THE CORPORATION; (II)
NO PERSON MAY CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S
CLASS A PREFERRED STOCK IN EXCESS OF 9.8% (BY VALUE OR BY
NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE
OUTSTANDING CLASS A PREFERRED STOCK OF THE CORPORATION;
(III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CLASS
A PREFERRED STOCK THAT WOULD RESULT IN THE CORPORATION BEING
"CLOSELY HELD" UNDER SECTION 856(H) OF THE CODE OR OTHERWISE
CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV)
NO PERSON MAY TRANSFER CLASS A PREFERRED STOCK IF SUCH
TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE
CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY
PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS
TO BENEFICIALLY OR CONSTRUCTIVELY OWN CLASS A PREFERRED
STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR
CONSTRUCTIVELY OWN CLASS A PREFERRED STOCK IN EXCESS OF THE
ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION.
IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE CLASS A PREFERRED STOCK REPRESENTED HEREBY
WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE OF A TRUST
FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN
ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS
AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS
SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT
OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE
OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN
VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB
INITIO. ALL TERMS IN THIS LEGEND DEFINED IN THE ARTICLES
SUPPLEMENTARY FOR THE CLASS A PREFERRED STOCK, AS THE SAME
MAY BE AMENDED FROM TIME TO TIME, SHALL HAVE THE MEANINGS
ASCRIBED TO THEM IN SUCH ARTICLES SUPPLEMENTARY, A COPY OF
WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP,
WILL BE FURNISHED TO EACH HOLDER OF CLASS A PREFERRED STOCK
ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY
BE DIRECTED TO XXXXXXX X. XXXXXXXX, THE SECRETARY OF THE
CORPORATION, AT THE CORPORATION'S PRINCIPAL OFFICE."
Instead of the foregoing legend, the share certificate may
state that the Corporation will furnish a full statement about
certain restrictions on transferability to a stockholder on
request and without charge.
(L) Severability. If any provision of this Section 12 or
any application of any such provision is determined to be invalid
by any Federal or state court having jurisdiction over the
issues, the validity of the remaining provisions shall not be
affected and other applications of such provision shall be
affected only to the extent necessary to comply with the
determination of such court.
(M) NYSE. Nothing in this Section 12 shall preclude the
settlement of any transaction entered into through the facilities
of the NYSE. The fact that the settlement of any transaction is
so permitted shall not negate the effect of any other provision
of this Section 12 and any transferee in such a transaction shall
be subject to all the provisions and limitations of this Section
12.
(N) Applicability of Section 12. The provisions set forth
herein under Section 12 shall apply to the Class A Preferred
Stock notwithstanding any contrary provisions of the Class A
Preferred Stock provided for elsewhere in these Articles
Supplementary.
THIRD: These Articles Supplementary have been approved by
the Board of Directors in the manner and by the vote required by
law.
FOURTH: The undersigned Chairman of the Board acknowledges
these Articles Supplementary to be the corporate act of the
Corporation and, as to all matters of fact required to be
verified under oath, the undersigned Chairman of the Board
acknowledges that to the best of his or her knowledge,
information and belief, these matters and facts are true in all
material respects and that this statement is made under the
penalties for perjury.
IN WITNESS WHEREOF, these Articles Supplementary are executed on
behalf of the Corporation by its Chairman of the Board this ____
day of June, 1998.
REALTY INCOME CORPORATION,
a Maryland corporation
By: ____________________________ (SEAL)
Chairman of the Board
Attest:
_______________________________
Secretary
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 1, 2008 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED
OR ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED
IN SECTION 1.3(ii)(A)(z) OF THE AGREEMENT. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.01 PER RIGHT, AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SECTION 11.1.2 OF THE
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO
AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
Realty Income Corporation
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 25, 1998, as the same may be amended
from time to time (the "Agreement"), between Realty Income
Corporation, a Maryland corporation (the "Company"), and The Bank
of New York, a New York banking corporation, as Rights Agent (the
"Rights Agent"), to purchase from the Company at any time after
the Distribution Date and prior to 5:00 P.M. (California time) on
July 1, 2008, at the offices of the Rights Agent, or its
successors as Rights Agent, designated for such purpose, one one-
hundredth of a fully paid, nonassessable share of Class A Junior
Participating Preferred Stock, par value $1.00 per share (the
"Preferred Shares") of the Company, at a purchase price of
$104.50 per one one-hundredth of a Preferred Share, subject to
adjustment (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to
Purchase and certification duly executed. The number of Rights
represented by this Right Certificate (and the number of one one-
hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of
____________, 1998 based on the Preferred Shares as constituted
at such date. Capitalized terms used in this Right Certificate
without definition shall have the meanings ascribed to them in
the Agreement. As provided in the Agreement, the Purchase Price
and the number of Preferred Shares which may be purchased upon
the exercise of the Rights represented by this Right Certificate
are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which 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. Copies of the Agreement are on file at the
principal offices of the Company and the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the offices of the Rights Agent
designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as
the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If 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 Agreement, the Board of
Directors may, at its option, (i) redeem the Rights represented
by this Right Certificate at a redemption price of $.01 per Right
at any time prior to the close of business on the tenth day after
the Shares Acquisition Date or (ii) exchange Common Shares for
the Rights represented by this Certificate, in whole or in part.
The period during which redemption of the Rights is permitted
may be extended by the Board of Directors of the Company, but
such an extension shall require the concurrence of a majority of
the Continuing Directors. Under certain circumstances set forth
in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights represented hereby (other than
fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the
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 the Preferred Shares or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the
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 Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right
or Rights represented by this Right Certificate shall have been
exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the
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 the
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
This Right Certificate shall not be valid or binding for any
purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of ____________,
1998.
Attest: Realty Income Corporation,
a Maryland corporation
By ______________________ By ___________________________
Title: Title:
Countersigned:
The Bank of New York, as Rights Agent
By_____________________________
Authorized Signature
[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)
Rights represented by 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:__________
___________________________________
Signature
Signature Guaranteed:
_________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended.
-----------------------------------------------------------------
The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are
not beneficially owned by and are not being assigned to an
Acquiring Person or an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights
represented by this Right Certificate from any person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate thereof.
Dated:__________________
_______________________________
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: Realty Income Corporation
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate
to purchase the Preferred Shares issuable upon the exercise of
such Rights (or such other securities or property of the Company
or of any other Person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be
issued in the name of:
____________________________________________________________
(Please print name and address)
____________________________________________________________
If such number of Rights shall not be all the Rights represented
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the name
of and delivered to:
Please insert social security
or other identifying number
____________________________________________________________
(Please print name and address)
____________________________________________________________
Dated: __________________
______________________________________
Signature
Signature Guaranteed:
______________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" as defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended.
The undersigned hereby certifies that:
(1) the Rights represented by this Right Certificate are
not beneficially owned by and are not being assigned to an
Acquiring Person or an Affiliate or an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights
represented by this Right Certificate from any person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate thereof.
Dated:_______________
___________________________________
Signature
-----------------------------------------------------------------
NOTICE
The signature in the foregoing Form of Assignment and Form
of Election to Purchase must conform to the name as written upon
the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form
of Assignment or Form of Election to Purchase is not completed,
the Company will deem the beneficial owner of the Rights
represented by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate hereof and such Assignment or
Election to Purchase will not be honored.
EXHIBIT C
AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS WHICH ARE HELD BY OR
HAVE BEEN HELD BY AN ACQUIRING PERSON OR ASSOCIATES OR AFFILIATES
THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF SHALL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On June 10, 1998 the Board of Directors of Realty Income
Corporation (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each share of common stock,
$1.00 par value (the "Common Shares"), of the Company outstanding
at the close of business on July 1, 1998 (the "Record Date"). As
long as the Rights are attached to the Common Shares, the Company
will issue one Right (subject to adjustment) with each new Common
Share so that all such shares will have attached Rights. When
exercisable, each Right will entitle the registered holder to
purchase from the Company one one-hundredth of a share of Class A
Junior Participating Preferred Stock (the "Preferred Shares") at
a price of $104.50 per one one-hundredth of a Preferred Share,
subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in a Rights Agreement,
dated as of June 25, 1998, as the same may be amended from time
to time (the "Agreement"), between the Company and The Bank of
New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a
public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the Common Shares
(an "Acquiring Person") or (ii) ten (10) business days (or such
later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement
or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the
Common Shares (the earlier of (i) and (ii) being called the
"Distribution Date"), the Rights will be represented, with
respect to any of the Common Share certificates outstanding as of
the Record Date, by such Common Share certificate together with a
copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or
earlier redemption exchange, termination, or expiration of the
Rights), the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the close of business on the Record
Date upon transfer or new issuance of the Common Shares will
contain a notation incorporating the Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange,
termination or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares, with or without
such notation or a copy of this Summary of Rights, will also
constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will
represent the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on July 1, 2008 subject to the Company's
right to extend such date (the "Final Expiration Date"), unless
earlier redeemed or exchanged by the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights
will be entitled, when, as and if declared, to a minimum
preferential quarterly dividend payment of $1.00 per share but
will be entitled to an aggregate dividend of 100 times the
dividend, if any, declared per Common Share. In the event of
liquidation, dissolution or winding up of the Company, the
holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share (plus any
accrued but unpaid dividends) but will be entitled to an
aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes and will vote together
with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive 100
times the amount received per Common Share. Preferred Shares
will not be redeemable. These rights are protected by customary
antidilution provisions. Because of the nature of the Preferred
Share's dividend, liquidation and voting rights, the value of one
one-hundredth of a Preferred Share purchasable upon exercise of
each Right should approximate the value of one Common Share.
The Purchase Price payable, and the number of Preferred
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares or convertible securities at less than the current market
price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness,
cash, securities or assets (excluding regular periodic cash
dividends at a rate not in excess of 125% of the rate of the last
regular periodic cash dividend theretofore paid or, in case
regular periodic cash dividends have not theretofore been paid,
at a rate not in excess of 50% of the average net income per
share of the Company for the four quarters ended immediately
prior to the payment of such dividend, or dividends payable in
Preferred Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription
rights or warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person or if
the Company were the surviving corporation in a merger with an
Acquiring Person or any affiliate or associate of an Acquiring
Person and the Common Shares were not changed or exchanged, each
holder of a Right, other than Rights that are or were acquired or
beneficially owned by the Acquiring Person (which Rights will
thereafter be void), will thereafter have the right to receive
upon exercise that number of Common Shares having a market value
of two times the then current Purchase Price of the Right. In
the event that, after a person has become an Acquiring Person,
the Company were acquired in a merger or other business
combination transaction or more than 50% of its assets or earning
power were sold, proper provision shall be made so that each
holder of a Right shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price of
the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right.
At any time after a Person becomes an Acquiring Person and
prior to the earlier of one of the events described in the last
sentence of the previous paragraph or the acquisition by such
Acquiring Person of 50% or more of the outstanding Common Shares,
the Board of Directors may cause the Company to exchange the
Rights (other than Rights owned by an Acquiring Person which will
have become void), in whole or in part, for Common Shares at an
exchange rate of one Common Share per Right (subject to
adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares or Common
Shares will be issued (other than fractions of Preferred Shares
which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be represented
by depository receipts), and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred Shares or
Common Shares on the last trading date prior to the date of
exercise.
The Rights may be redeemed in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") by the Board of
Directors at any time prior to the close of business on the tenth
day following the first date of public announcement that a Person
has become an Acquiring Person. The redemption of the Rights may
be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company beyond those
as an existing stockholder, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Agreement may be amended by the
Board of Directors of the Company for so long as the Rights are
then redeemable, and after the Rights are no longer redeemable,
the Company may amend or supplement the Agreement in any manner
that does not adversely affect the interests of the holders of
the Rights.
A copy of the Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form
8-K. A copy of the Agreement is available free of charge from
the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Agreement, which is incorporated herein by
reference.
