BRAKE HEADQUARTERS, U.S.A., INC.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agent
Rights Agreement
Dated as of October 13, 1998
Table of Contents
Section Page
1. Certain Definitions 1
2. Appointment of Rights Agent 6
3. Issue of Rights Certificates 6
4. Form of Rights Certificates 7
5. Countersignature and Registration 8
6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates 9
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 10
8. Cancellation and Destruction of Rights Certificates 11
9. Reservation and Availability of Capital Stock 12
10. Preferred Stock Record Date 13
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights 13
12. Certificate of Adjusted Purchase Price
or Number of Shares 21
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power 22
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14. Fractional Rights and Fractional Shares 25
15. Rights of Action 26
16. Agreement of Rights Holders 26
17. Rights Certificate Holder Not Deemed a Xxxxxxxxxxx 00
00. Concerning the Rights Agent 27
19. Merger or Consolidation or Change of Name of
Rights Agent 27
20. Duties of Rights Agent 28
21. Change of Rights Agent 30
22. Issuance of New Rights Certificates 31
23. Redemption and Termination 31
24. Exchange 32
25. Notice of Certain Events 33
26. Notices 34
27. Supplements and Amendments 35
28. Successors 35
29. Determinations and Actions by the Board of
Directors, etc 35
30. Benefits of this Agreement 36
31. Severability 36
32. Governing Law 36
33. Counterparts 36
34. Descriptive Headings 37
ii
Exhibits
--------
Exhibit A: Form of Certificate of Designation of Series A Junior
Participating Preferred Stock of Brake Headquarters
U.S.A., Inc.
Exhibit B: Form of Rights Certificate
Exhibit C: Summary of Rights to Purchase Preferred Stock
iii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 13, 1998 (the "Agreement"), between
BRAKE HEADQUARTERS U.S.A., INC., a Delaware corporation (the "Company"), and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
"Rights Agent").
WHEREAS, effective October 2, 1998 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company (the "Board") authorized and declared a
distribution of one Right for each share of common stock, par value $0.01 per
share, of the Company (the "Company Common Stock") outstanding at the Close of
Business on October 13, 1998 (the "Record Date") and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and,
except as otherwise provided in Section 23, the Distribution Date, each Right
initially representing the right to purchase upon the terms and subject to the
conditions hereinafter set forth two Units (as hereinafter defined) of
Preferred Stock (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Beneficial Owner of
Company Common Stock (other than an Exempt Person) or Group who
triggers any of the Flip-In Events set forth under Section 11(a) (ii)
(A), (B) or (C).
(b) "Adjustment Fraction" has the meaning set forth in
Section 11(p).
(c) [DELETED]
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof.
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial
owner" under Rule 13d-3 of the General Rules and Regulations
under the Exchange Act (the "Exchange Act
1
Regulations") as in effect on the date hereof; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own", any securities under
this subparagraph (i) as a result of an agreement,
arrangement or understanding to vote such securities if such
agreement, arrangement or understanding (A) arises solely
from a revocable proxy given in response to a proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the Exchange Act and the
Exchange Act Regulations, and (B) is not reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor report);
(ii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate of such other Person) with which such Person (or
any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the
proviso to subparagraph (i) of this paragraph (c)) or
disposing of such securities; provided, however, that
nothing in this definition shall cause a Person engaged in
business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition;
or
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the
satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options (subject to the exception
provided under (D) below), or otherwise;
provided, however, that under this paragraph (c) a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own", (A)
securities tendered pursuant to a tender or exchange offer made in
accordance with Exchange Act Regulations by such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (B) securities that may be
issued upon exercise of Rights at any time prior to the occurrence of
a Triggering Event, (C) securities that may be issued upon exercise
of Rights from and after the occurrence of a Triggering Event, which
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(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment
made with respect to any Original Rights, or (D) securities that were
acquired in a transaction that was approved by the Board prior to the
consummation of such transaction (including transactions involving
conversion rights, exchange rights, warrants
2
or options), unless thereafter in an additional transaction, the
Person holding such securities (i) acquires additional securities,
(ii) initiates or undertakes the actions set forth under Section
11(a)(ii)(A)(1)-(7), or (iii) acquires additional securities in the
manner set forth under Section 11(a)(ii)(C), and such additional
transaction was not approved by the Board of Directors of the Company
prior to the consummation of such transaction whereupon such Person
shall be deemed, as of the date of the additional transaction (to be
determined, if need be, by the Board), to be the "Beneficial Owner"
of all securities held by such Person.
(f) "Board" has the meaning set forth in the preamble.
(g) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on
the next succeeding Business Day.
(i) "Common Stock" of any Person other than the Company
shall mean the capital stock of such Person with the greatest voting
power, or, if such Person shall have no capital stock, the equity
securities or other equity interest having power to control or direct
the management of such Person.
(j) "Company" has the meaning set forth in the preamble.
(k) "Company Common Stock" has the meaning set forth in the
Whereas Clause.
(l) [DELETED]
(m) "Distribution Date" has the meaning set forth in Section
3(a).
(n) "Equivalent Preferred Stock" has the meaning set forth
in Section 11(b).
(o) "Exchange Ratio" has the meaning set forth in Section 24
hereof.
(p) [DELETED]
(q) "Exempt Person" shall mean other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or Person, including any
trustee or fiduciary, organized, appointed or established by the
Company, with respect to such plan acting in such capacity
3
(r) "Expiration Date" has the meaning set forth in Section
7(a).
(s) "Final Expiration Date" has the meaning set forth in
Section 7(a).
(t) "Flip-In Event" shall mean any event described in
Section 11(a)(ii)(A), (B) and (C).
(u) "Flip-In Trigger Date" has the meaning set forth in
Section 11(a)(iii).
(v) "Flip-Over Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(w) "NASDAQ" has the meaning set forth in Section 11(d)(i).
(x) "Permitted Offer" shall mean a tender offer or an
exchange offer for all outstanding shares of the Company Common Stock
(and any other voting stock of the Company then outstanding and
entitled to vote) at a price and on terms determined by at least a
majority of the members of the Board who are not officers or
employees of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving
advice from one or more investment banking firms, to be (a) at a
price and on terms that are fair to stockholders (taking into account
all factors that such members of the Board deem relevant including,
without limitation, prices that could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the
Company and its stockholders.
(y) "Person" shall mean any individual, partnership, firm,
corporation, association, trust unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act.
(z) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, par value $.001 per share, of the
Company having the voting powers, designation, preferences and
relative, participating, optional or other special rights and
qualifications, limitations and restrictions described in the
Certificate of Designations set forth as Exhibit A hereto.
(aa) "Preferred Stock Equivalents" has the meaning set forth
in Section 11(a)(iii).
(ab) "Principal Party" has the meaning set forth in Section
13(b)
(ac) "Purchase Price" has the meaning set forth in Section
7(b).
4
(ad) "Record Date" has the meaning set forth in the Whereas
Clause.
(ae) "Redemption Price" has the meaning set forth in Section
23.
(af) "Registered Common Stock" has the meaning set forth in
Section 13(b)(ii).
(ag) "Registration Date" has the meaning set forth in
Section 9(c).
(ah) "Registration Statement" has the meaning set forth in
Section 9(c).
(ai) "Right" has the meaning set forth in the Whereas
Clause.
(aj) "Rights Agent" has the meaning set forth in the
preamble.
(ak) "Rights Certificate" has the meaning set forth in
Section 3(a).
(al) "Rights Dividend Declaration Date" has the meaning set
forth in the Whereas Clause.
(am) [DELETED]
(an) "Stock Acquisition Date" shall mean the first date of
public announcement (including, without limitation, the filing of any
report pursuant to Section 13(d) of the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such.
(ao) "Subsidiary" shall mean, with reference to any Person,
any other Person of which an amount of voting securities or equity
interests sufficient to elect at least a majority of the directors or
equivalent governing body of such other Person is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by
such first-mentioned Person.
(ap) "Summary of Rights" has the meaning set forth in
Section 3(b).
(aq) "Substitution Period" has the meaning set forth in
Section 11(a)(iii).
(ar) "Trading Days" has the meaning set forth in Section
11(d)(ii).
(as) "Triggering Event" shall mean any Flip-In Event or any
Flip-Over Event.
(at) "Unit" has the meaning set forth in Section 7(b).
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SECTION 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
With the consent of the Rights Agent, the Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day (or such later specified or
unspecified date as may be determined by action of the Board and of which the
Company will give the Rights Agent prompt written notice) after the Stock
Acquisition Date (provided that the Acquiring Person shall remain the
Beneficial Owner of the requisite percentage of Company Common Stock
outstanding on such date under Section 11(a)(ii)(A), (B) or (C)), (ii) the
Close of Business on the tenth Business Day (or such later date as may be
determined by action of the Board prior to such time as any Person becomes an
Acquiring Person and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than any Exempt Person) is first published or sent or given within the
meaning of Rule 14d-2(a) or Rule 14d-4(a) of the Exchange Act Regulations or
any successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding (the earlier of (i), (ii) and (iii) above being the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for shares of Company
Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the
"Rights Certificates"), evidencing one Right for each share of Company Common
Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Company Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the
Rights Certificates, the Company may make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Stock, in a form which may be appended to certificates that represent shares
of Company Common Stock, in substantially the form attached hereto as Exhibit
C (the "Summary of Rights"), by first-class, postage prepaid mail, to each
record holder of shares of Company Common Stock as of the Close of Business on
6
the Record Date, at the address of such holder shown on the records of the
Company.
(c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock which are issued (including any
shares of Company Common Stock held in treasury) after the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date.
Certificates representing such shares of Company Common Stock, issued after
the Record Date shall bear the following legend:
"This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the Rights
Agreement between BRAKE HEADQUARTERS U.S.A., INC. (the
"Company") and CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(the "Rights Agent") dated as of October 13, 1998 as may be
amended or supplemented from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office
of the Rights Agent. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void."
With respect to certificates representing shares of Company
Common Stock (whether or not such certificates include the foregoing legend or
have appended to them the Summary of Rights), until the earlier of the
Distribution Date and the Expiration Date, the Rights associated with the
shares of Company Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of the shares of
Company Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the shares of Company Common Stock
represented by such certificates.
SECTION 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase, assignment and certificate to be
printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or
any rule or regulation thereunder or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the Record
Date and on their face shall
7
entitle the holders thereof to purchase such number of Units of Preferred
Stock as shall be set forth therein at the price set forth therein, but the
amount and type of securities, cash or other assets that may be acquired upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of any such Associate or Affiliate)
which becomes a transferee after the Acquiring Person becomes such, or (iii) a
direct or indirect transferee of an Acquiring Person (or of any such Associate
or Affiliate) which becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which
a majority of the Board has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
Section 7(e) hereof shall, upon the written direction of a majority of the
Board, contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement."
The provisions of Section 7(e) of this Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
SECTION 5. Countersignature and Registration. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President or one of its Senior Vice Presidents,
under its corporate seal reproduced thereon attested by its Secretary or one
of its Assistant Secretaries. The signature of any of these officers on the
Rights Certificates may be manual or facsimile. Rights Certificates bearing
the manual or facsimile signatures of the individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at
the date of such Rights Certificates. No Rights Certificate shall be entitled
to any benefit under this Agreement or be valid for any purpose unless there
appears on such Rights Certificate a countersignature duly executed by the
Rights Agent by manual signature of an authorized officer, and such
countersignature upon any Rights Certificate shall be conclusive
evidence, and the only
8
evidence, that such Rights Certificate has been duly countersigned as required
hereunder.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the name and
address of each holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate and the date of each Rights
Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of Units of Preferred Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and executed the certificate set
forth in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of the Rights represented by
such Rights Certificate or Affiliates or Associates thereof as the Company
shall reasonably request; whereupon the Rights Agent shall, subject to the
provisions of Section 4(b), Section 7(e) and Section 14 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange
of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen
or destroyed, upon request by the registered holder of the Rights represented
thereby and upon payment to the Company and the Rights Agent of all reasonable
expenses incident thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in substitution for the
lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and
representing the equivalent number of Rights, but, in the case of loss, theft
or destruction, only upon receipt of evidence satisfactory to the Company and
the Rights Agent of such loss, theft or destruction of such Rights Certificate
and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Prior to
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the earlier of (i) the Close of Business on the tenth anniversary hereof (the
"Final Expiration Date"), and (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the earlier of (i) and (ii) being the
"Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e), 9(c), 11(a)(iii) and 23(a) hereof,
exercise the Rights evidenced thereby in whole or in part at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form
of election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following
a Triggering Event, other securities, cash or other assets, as the case may
be) for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share
(each such one one-hundredth of a share being a "Unit") of Preferred Stock
upon exercise of Rights shall be one-third (1/3) of the price of a share of
the Company Common Stock (the "Purchase Price") as such price shall be
determined under Section 11(d) hereof, and shall be payable in accordance with
paragraph (c) below. The Purchase Price of each Unit shall be pegged to the
price of the Company Common Stock, irrespective of whether on the Distribution
Date the Preferred Stock is listed or publicly traded or able to be valued by
any of the mechanisms set forth in Section 11(d)(i).
(c) As promptly as practicable following the occurrence of
the Distribution Date, the Company shall deposit with the Rights Agent,
certificates representing the shares of Preferred Stock that may be acquired
upon exercise of the Rights and shall cause the Rights Agent to enter into an
agreement pursuant to which the Rights Agent shall issue the shares of
Preferred Stock so deposited. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price for the Units of Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) to be purchased thereby as set forth below and an amount equal to
any applicable transfer tax or evidence satisfactory to the Company of payment
of such tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) requisition from the Company the amount of cash, if
any, to be paid in lieu of fractional shares in accordance with Section 14
hereof, (ii) cause the shares of Preferred Stock to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iii) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. In the event that the Company is
obligated to issue Company Common Stock, other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such Company Common
Stock, other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified or bank check or money order
payable to the order of the Company.
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(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Flip-In Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person other than any such Person that the Board in good faith
determines was not involved in and did not cause or facilitate, directly or
indirectly (including through any change in the Board), such Flip-In Event,
(ii) a direct or indirect transferee of an Acquiring Person (or of any such
Associate or Affiliate) who or which becomes a transferee after the Acquiring
Person becomes such, or (iii) a direct or indirect transferee of an Acquiring
Person (or of any such Associate or Affiliate) who or which becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and which receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person (or any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person (or any
such Associate or Affiliate) or to any Person with whom the Acquiring Person
(or such Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shares of Company Common Stock
or the Company or (B) a transfer which a majority of the Company's Board has
determined to be part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall be null
and void without any further action, and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights or any
other Person as a result of its failure to make any determination under this
Section 7(e) or such Section 4(b) with respect to an Acquiring Person or its
Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The
11
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any Rights Certificates acquired
by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or shall, at
the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved
and kept available, out of its authorized and unissued shares of Preferred
Stock, the number of shares of Preferred Stock that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all
outstanding Rights. Upon the occurrence of any events resulting in an increase
in the aggregate number of shares of Preferred Stock or Company Common Stock
(or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make
appropriate increases in the number of shares so reserved.
(b) If the shares of Preferred Stock to be issued and
delivered upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall , at the earliest possible opportunity,
but in no event, no later than the period from the Distribution Date through
the Expiration Date, use its best efforts to cause all securities reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Flip-In Event and/or a determination
by the Company in accordance with section 11(a)(iii) hereof of the
consideration to be delivered by the Company upon exercise of the Rights or,
if so required by law, as soon as practicable following the Distribution Date
(such date being the "Registration Date"), to file a registration statement on
an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities that may be acquired upon
exercise of the Rights (the "Registration Statement"), (ii) to cause the
Registration Statement to become effective as soon as practicable after such
filing, (iii) to cause the Registration Statement to continue to be effective
(and to include a prospectus complying with the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for the securities covered by the Registration Statement, and (B)
the Expiration Date, and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any
acquisition of securities upon exercise of the Rights complies with any
applicable state securities or "blue sky" laws. The Company may temporarily
suspend the exercisability of the Rights until such time as such a
Registration Statement has been declared effective. Upon any such suspension,
the Company shall issue a public announcement stating 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 if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or any required registration statement shall
not have been declared effective.
12
(d) The Company shall take such action as may be necessary
to ensure that all shares of Preferred Stock (and, following the occurrence of
a Triggering Event, any other securities that may be delivered upon exercise
of Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities, duly and validly authorized and issued and fully
paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer
tax imposed in connection with the issuance or delivery of the Rights
Certificates or upon the exercise of Rights; provided, however, the Company
shall not be required to pay any such tax imposed in connection with the
issuance or delivery of Units of Preferred Stock, or any certificates for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or
deliver any certificates for Units of Preferred Stock (or, following the
occurrence of a Triggering Event, any other securities, cash or assets, as the
case may be) to, or 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 Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
SECTION 10. Preferred Stock Record Date. Each Person in whose name
any certificate for Units of Preferred Stock (or, following the occurrence of
a Triggering Event, other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
other securities) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open
and, further provided, however, that if delivery of Units of Preferred Stock
is delayed pursuant to Section 9(e) hereof, such Persons shall be deemed to
have become the record holders of such Units of Preferred Stock only when such
Units first become deliverable. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any
rights of a shareholder of the Company with respect to securities for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of securities
covered by each Right
13
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares,
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), 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 of Units or shares of Preferred Stock or shares of capital stock, as
the case may be, issuable on such date upon exercise of the Rights, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of
the Company were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination
or reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person who has become the Beneficial Owner
of more than 10% of the Company Common Stock then outstanding, or any
Associate or Affiliate of such Person, at any time after the date of
this Agreement, directly or indirectly, (1) shall merge into the
Company or otherwise combine with the Company and the Company shall
be the continuing or surviving corporation of such merger or
combination and Company Common Stock shall remain outstanding and
unchanged, (2) shall, in one transaction or a series of transactions,
transfer any assets to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for shares of Company Common Stock,
for other equity securities of the Company or any such Subsidiary, or
for securities exercisable for or convertible into shares of equity
securities of the Company or any of its Subsidiaries (whether Company
Common Stock or otherwise) or otherwise obtain from the Company or
any of its Subsidiaries, with or without consideration, any
additional shares of such equity securities or securities exercisable
for or convertible into such equity securities (other than pursuant
to a pro rata distribution to all holders of Company Common Stock),
(3) shall sell, purchase, lease, exchange, mortgage, pledge, transfer
or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with (as the case may be) the Company or
any of its Subsidiaries or any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan
14
acting in such capacity, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary or plan
than those that could have been obtained in arm's length negotiations
with an unaffiliated third party, other than pursuant to a
transaction set forth in Section 13(a) hereof, (4) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of the Company's
subsidiaries or any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity (other than transactions, if
any, consistent with those engaged in, as of the date hereof, by the
Company and such Acquiring Person or such Associate or Affiliate),
assets (including securities) having an aggregate fair market value
of more than $10,000,000.00, other than pursuant to a transaction set
forth in Section 13(a) hereof, (5) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose
of, in one transaction or a series of transactions, to, from or with
the Company or any of its subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity, any
material trademark or material service xxxx, other than pursuant to a
transaction set forth in Section 13(a) hereof, (6), shall receive, or
any designee, agent or representative of such Acquiring Person or any
Affiliate or Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other than
compensation for full-time employment as a regular employee at rates
in accordance with the Company's (or its Subsidiaries') past
practices, (7) shall receive the benefit, directly or indirectly
(except proportionately as a holder of Company Common Stock or as
required by law or governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity; or
(B) any Person (other than any Exempt Person) shall
become the Beneficial Owner of 15% or more of the shares of Company
Common Stock then outstanding, other than pursuant to any transaction
set forth in Section 13(a) hereof, and shall remain the Beneficial
Owner of 15% or more of the shares of Company Common Stock
outstanding as of the Distribution Date; or
(C) during such time as there is an Acquiring Person
or a holder of more than 15% of the Company Common Stock, there shall
be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any
other transaction or series of transactions involving the Company or
any of its Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the
15
outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person or 15% holder or any
Associate or Affiliate of any Acquiring Person or 15% holder (unless
such 1% increase shall have received the approval of the Board);
then, immediately upon the date of the occurrence of an event described in
Section 11(a)(ii)(A)-(C) hereof, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive for each such Right that he holds, two
Units of Preferred Stock at the Purchase Price set forth under Section 7(b) as
adjusted, or the Board may undertake the actions set forth under Section 24
below.
(iii) In the event that the number of shares of Preferred
Stock which are authorized by the Company's Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company, by the vote of a majority of the Board, with respect to each Right,
shall make adequate provision to substitute for such insufficiency, upon
payment of the applicable Purchase Price in the sole discretion of a majority
of the Board, either (1) cash, (2) a reduction in the Purchase Price, (3)
Company Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock (such other
shares being "Preferred Stock Equivalents"), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the value of the insufficiency with respect to each
Right, Current Value, where such aggregate value has been determined by a
majority of the Board, after receiving advice from a nationally recognized
investment banking firm; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty days following the later of (x) the first occurrence of a Flip-In Event
and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as
the "Flip-In Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, Units of Preferred Stock (to the extent available) and
then, if necessary, cash, which Units of Preferred Stock and/or cash shall
have an aggregate value equal the value of such insufficiency. If the Board
shall determine in good faith that it is likely that sufficient additional
shares of Preferred Stock could be authorized for issuance upon exercise in
full of the Rights, the 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days after the Flip-In Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action needs to
be taken pursuant to the first and/or second sentence of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any
such
16
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of a Unit of Preferred Stock
shall be the one third the value of the current market price (as determined
pursuant to Section 11(d) hereof) per share of Company Common Stock on the
Flip-In Trigger Date and the value of any Preferred Stock Equivalents shall be
deemed to have the same value as the Preferred Stock on such date.
(b) [DELETED]
(c) [DELETED]
(d) (i) For the purpose of any computation under Section
7(b) and under Section 11(a)(iii) hereof, the "current market price" per share
of Company Common Stock or Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such shares for the ten
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Company Common
Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Company Common Stock for the ten consecutive Trading
Days immediately following such date; provided, however, if prior to the
expiration of such requisite ten Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such shares or
securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares, then, following
the ex-dividend date for such dividend or the record date for such
subdivision, as the case may be, the "current market price" shall be properly
adjusted to take into account such event. The closing price for each day shall
be, if the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which such shares are listed or admitted to trading or, if such
shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date such
shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market
in such shares selected by a majority of the Board. If on any such date no
market maker is making a market in such shares, the fair value of such shares
on such date as determined in good faith by a majority of the Board shall be
used. If such shares are not publicly held or not so listed or traded,
"current market price" per share shall mean the fair value per share as
determined in good faith by a majority of the Board, whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. The term "Trading Day" shall mean, if such shares
are listed or admitted to trading on any national securities exchange, a day
on which the principal national securities exchange on which such shares are
listed or admitted to trading is open for the transaction of business or, if
such shares are
17
not so listed or admitted, a Business Day.
(ii) For the purpose of any computation of the value of the
Preferred Stock for any purpose other than to determine the Purchase Price
under Section 7(b) and Section 11(a)(iii) hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner as
set forth above for Company Common Stock in clause (i) of this Section 11(d)
(other than the fourth sentence thereof). If the current market price per
share of Preferred Stock cannot be determined in the manner provided above or
if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an amount equal to
100 (as such amount may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to Company Common
Stock occurring after the date of this Agreement) multiplied by the current
market price per share of Company Common Stock. If neither Company Common
Stock nor Preferred Stock is publicly held or so listed or traded, "current
market price" per share of the Preferred Stock shall mean the fair value per
share as determined in good faith by a majority of the Board 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.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a share of
Company Common Stock or Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of
the transaction which mandates such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Stock contained in Sections
11(a), (b), (e), (g), (i), (j), (k), (1) and (m) and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase price hereunder shall evidence the
right to purchase at the adjusted Purchase Price, the number of Units of
Preferred Stock (or other securities or amount of cash or combination thereof)
that may be acquired from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
18
(h) [DELETED]
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of Units of Preferred Stock that may be acquired
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Units of Preferred Stock 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
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date
of such public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable cause to be distributed to holders
of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Units of Preferred Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Unit and the number of Units of
Preferred Stock which was expressed in the Initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the number of Units of
Preferred 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 such fully paid and
non-assessable number of Units of Preferred Stock at such adjusted Purchase
Price.
(1) 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
19
such record date of that number of Units of Preferred Stock and shares of
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Units of Preferred Stock and shares of
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority
of the Board shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock, shall not be taxable to such holders or shall
reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which is not prohibited by Section
11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which is not prohibited by Section
11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which is not prohibited by Section 11(o) hereof), if (x) at the time
of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights, (y) prior to, simultaneously
with or immediately after such consolidation, merger or sale, the Person which
constitutes, or would constitute, the "Principal Party" (as hereinafter
defined under Section 13(b)) for purposes of Section 13(a) hereof shall have
distributed or otherwise transferred to its shareholders or other persons
holding an equity interest in such Person Rights previously owned by such
Person or any of its Affiliates and Associates, or (z) the identity, form or
nature of organization of the Principal Party (including without limitation
the selection of the Person that will be the Principal Party as a result of
the Company's entering into one or a series of consolidations, mergers, sales,
leases or transfers with more than one party) would preclude or limit the
exercise of Rights or otherwise diminish substantially or eliminate the
benefits intended to be afforded by the Rights; provided, however, this
Section 11(n) shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company.
20
(o) After the Distribution Date, the Company shall not,
except as permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Company Common Stock payable
in shares of Company Common Stock, (ii) subdivide the outstanding shares of
Company Common Stock, (iii) combine the outstanding shares of Company Common
Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Company Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Company Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Company Common Stock immediately prior to such event by a fraction
(the "Adjustment Fraction") the numerator of which shall be the total number
of shares of Company Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of shares of Company Common Stock outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the number of Rights
associated with one share of Company Common Stock, the Company may elect to
adjust the number of Units of a share of Preferred Stock purchasable upon the
exercise of one Right and the Purchase Price. If the Company makes such
election, the number of Rights associated with one share of Company Common
Stock shall remain unchanged, and the number of Units of a share of Preferred
Stock purchasable upon exercise of one Right and the Purchase Price shall be
proportionately adjusted to that (i) the number of Units of a share of
Preferred Stock purchasable upon exercise of a Right following such adjustment
shall equal the product of the Units of a share of Preferred Stock purchasable
upon exercise of a Right immediately prior to such adjustment multiplied by
the Adjustment Fraction and (ii) the Purchase Price following such adjustment
shall equal the product of the Purchase Price immediately prior to such
adjustment multiplied by the Adjustment Fraction.
SECTION 12. Certificate of Adiusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, 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 the transfer
agent for the Preferred Stock and the Company Common Stock, a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or if prior to the Distribution Date, to each holder of a
certificate representing shares of Company Common Stock) in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be
deemed to have
21
knowledge of any such adjustment unless and until it shall have received such
certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the Company
in a transaction which is not prohibited by Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger (y) any Person (other than a Subsidiary of the Company
in a transaction which is not prohibited by Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the
outstanding shares of Company Common Stock shall be converted into or
exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which is not prohibited by Section 11(o) hereof), in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
(any such event being a ("Flip-Over Event"), then, and in each such case,
proper provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive
for each Right, upon the exercise thereof and at a purchase price of 33-1/3%
of the current market price (determined pursuant to Section 11(d) hereof) per
share of the Common Stock of such Principal Party on the date of consummation
of such Flip-Over Event (which, following the first occurrence of a Flip-Over
Event, shall be the "Purchase Price" for all purposes of this Agreement), two
(2) validly authorized and issued, fully paid and non-assessable shares of
Common Stock of the Principal Party (as such term is hereinafter defined),
which shares shall not be subject to any liens, encumbrances, rights of first
refusal, transfer restrictions or other adverse claims; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
Flip-Over Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Flip-Over Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number
of shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions of this
Agreement shall thereafter be applicable to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no further effect following the first
occurrence of any Flip-Over Event. The provisions of this Section 13 shall not
apply to any Flip-Over Event that was approved by the Board prior to the
consummation of such Flip-Over Event.
(b) "Principal Party" shall mean: (i) in the case of any
transaction described in clause (x) or (y) of the first sentence of Section
13(a), (A) the Person that is the issuer of any securities into which shares
of Company Common Stock are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of Common Stock that has the
22
highest aggregate current market price (determined pursuant to Section 11(d)
hereof) and (B) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a), the Person that is the party receiving
the largest 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 transferred pursuant to such transaction or transactions or if the
Person receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d) hereof);
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act
("Registered Common Stock"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect
subsidiary of another Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of such
firstmentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person
is directly or indirectly controlled by more than one Person, and one or more
of such other Persons has Registered Common Stock outstanding, "Principal
Party" shall refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and (4) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the corporation having the greatest shareholders equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13, and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as is
practicable following the execution of such agreement, a registration
statement under the Securities Act with
23
respect to the Common Stock that may be acquired upon exercise of the Rights,
(B) cause such registration statement to remain effective (and to include a
prospectus complying with the requirements of the Securities Act) until the
Expiration Date, and (C) as soon as practicable following the execution of
such agreement, take such action as may be required to ensure that any
acquisition of such Common Stock upon the exercise of the Rights complies with
any applicable state security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act; and
(iii) use its best efforts, if the Common Stock of the
Principal Party is or shall become listed on a national securities exchange,
to list (or continue the listing of) the Rights and the securities purchasable
upon the exercise of the Rights on such securities exchange and, if the Common
Stock of the Principal Party shall not be listed on a national securities
exchange, to cause the Rights to be reported by NASDAQ or such other
transaction reporting system then in use.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection with,
or as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then current market price per share (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock of
such Principal Party at less than such then current market price (other than
to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13; then, in such event, the Company 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 cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers. In the
event that a Flip-Over Event shall occur at any time after the occurrence of a
Flip-In Event, the Rights which have not, theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(f) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
sub-paragraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Person who acquired shares
24
of Preferred Stock and/or Company Common Stock pursuant to a Permitted Offer
(or a wholly owned subsidiary of any such Person or Person), (ii) the price
per share of Preferred Stock and/or Company Common Stock offered in such
transaction is not less than the price per share of Preferred Stock and/or
Company Common Stock paid to all holders of Preferred Stock and/or Company
Common Stock whose shares were purchased pursuant to such Permitted Offer, and
(iii) the form of consideration being offered to the remaining holders of
shares of Preferred Stock and/or Company Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13(f) all Rights hereunder shall expire.
SECTION 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such fractional Rights
would otherwise be issuable, an amount in cash equal to such fraction of the
market value of a whole Right. For purposes of this Section 14(a), the market
value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights for any
day shall be, if the Rights are listed or admitted to trading on a national
securities 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 a majority of the Board If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by a majority of the Board shall be used and
such determination shall be described in a statement filed with the Rights
Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence such fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock). In lieu of such fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a
share, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the then current market price of a share of Preferred
Stock on the day of exercise, determined in accordance with Section 11(d)
hereof.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
25
SECTION 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of certificates representing shares of Company Common Stock) and,
where applicable, the Company; and any registered holder of a Rights
Certificate (or, prior to the Distribution Date, of a certificate representing
shares of Company Common Stock), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the Distribution
Date, of a certificate representing shares of Company Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company or any other
Person to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject to
this Agreement. After a Triggering Event, holders of Rights shall be entitled
to recover the reasonable costs and expenses, including attorney's fees,
incurred by them in any action to enforce the provisions of this Agreement.
SECTION 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by Rights Certificates and will be transferable only in connection
with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Company Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither
26
the Company nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or, except as provided in
Section 25 hereof, to receive notice of meetings or other actions affecting
shareholders, or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses, including reasonable fees and disbursements of its
counsel, incurred in connection with the execution and administration of this
Agreement and the exercise and performance of its duties hereunder. The
Company shall indemnify the Rights Agent for, and hold it harmless against,
any loss, liability, or expense, incurred without gross 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 hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Preferred Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been 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. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or, with which it may be consolidated, or any
corporation resulting from any merger or
27
consolidation to which the Rights Agent or any successor Rights Agent shall be
a party, or any corporation succeeding to the corporate trust or shareholder
services businesses 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 document or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be specified herein) may be
deemed to be conclusively proved and established by a certificate signed by
any executive officer 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.
28
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or for the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or failure by the
Company to satisfy conditions contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights Agent of
the certificate describing any such adjustment contemplated by Section 12);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred
Stock or any other securities to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Preferred Stock or any other
securities will, when so issued, be validly authorized and issued, fully paid
and non-assessable.
(f) The Company shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties under
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any executive officer of the Company, and to apply to any executive
officer of the Company for advice or instructions in connection with its
duties, 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.
Any application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for any
action taken by or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the
date any such officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
29
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents and the Rights Agent shall not
be answerable or accountable for any act, 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, however, that reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties or in the exercise of its
rights hereunder if the Rights Agent shall have reasonable grounds for
believing that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to, the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed, not signed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company. If such certificate has been completed and signed and shows
a negative response to clauses 1 and 2 of such certificate, unless previously
instructed otherwise in writing by the Company (which instructions may impose
on the Rights Agent additional ministerial responsibilities, but no
discretionary responsibilities), the Rights Agent may assume without further
inquiry that the Rights Certificate is not owned by a person described in
Section 4(b) or Section 7(e) hereof and shall not be charged with any
knowledge to the contrary.
SECTION 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to the
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to the transfer agent
of the Company Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty days after giving
notice of such
30
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or any state
of the United States in good standing, shall be authorized to do business as a
banking institution in the State of New York, shall be authorized under such
laws to exercise corporate trust or stock transfer powers, shall be subject to
supervision or examination by federal or state authorities and shall have at
the time of its appointment as Rights Agent a combined capital and surplus of
at least $100,000,000 or (b) an Affiliate of a corporation described in clause
(a). 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 the transfer agent of the
Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by a majority of the Board to reflect any adjustment
or change made in accordance with the provisions of this Agreement in the
Purchase Price or the number or kind or class of shares or other securities or
property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock
following the Distribution Date and prior to the Expiration Date, the Company
(a) shall, with respect to shares of Company Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by a majority of the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be
issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
SECTION 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Board,
at any time prior to the earlier of (i) the Distribution Date, or (ii) the
Final Expiration Date, redeem all but not less than all of the
31
then outstanding Rights at a redemption price of $.0l per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being the "Redemption Price"); provided, however, that the
Rights may not be redeemed following any merger to which the Company is a
party that (i) occurs after a Flip-In Event has occurred and (ii) was not
approved by the stockholders of the Company at a stockholders' meeting. If,
following the occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any Triggering
Event, (i) a Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction or
series of transactions, not directly or indirectly involving the Company or
any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event such that such Person is thereafter a Beneficial Owner of 10%
or less of the outstanding shares Common Stock, and (ii) there are no other
Persons, immediately following the occurrence of the event described in clause
(i), who are Acquiring Persons, then the right of redemption set forth in this
Section 23(a) shall be reinstated and thereafter be subject to the provisions
of this Section 23. Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first occurrence
of a Flip-In Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, by action of a majority
of the Board, pay the Redemption Price either in shares of Company Common
Stock (based on the "current market price", as defined in Section 11(d)
hereof, of the shares of Company Common Stock at the time of redemption) or
cash.
(b) Immediately upon the action of a majority of the Board
ordering the redemption of the Rights, evidence of which shall be filed with
the Rights Agent, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for each Right
so held. Promptly after the action of a majority of the Board ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears
upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for Company Common Stock.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. Exchange. (a) The Board may, at its option, at any time
and from time to time after the first occurrence of a Flip-In Event, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
7(e) hereto) for Units of Preferred Stock or Preferred Stock Equivalents or
any combination thereof, at an exchange ratio of two Units of Preferred Stock
per Right, or such number of Preferred Stock Equivalents or units representing
fractions thereof as would be deemed to have the same value as two Units of
Preferred Stock per Right, appropriately adjusted, if necessary, to reflect
any stock split, stock dividend or similar transaction occurring after the
Rights Dividend Declaration Date (such exchange ratio being hereinafter
referred to as
32
the "Exchange Ratio"), without payment of any cash Purchase Price.
Notwithstanding the foregoing, the Board may not effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the shares of Company Common Stock then outstanding.
(b) Immediately upon the effectiveness of the action of the
Board ordering the exchange of any Rights pursuant to and in accordance with
subsection (a) of this Section 24 (which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or
may be effective at some future time) and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that
number of shares of Preferred Stock and/or Preferred Stock Equivalents equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company 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 will state the method by which the exchange of the shares of
Preferred Stock and/or Preferred Stock Equivalents for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected as nearly pro rata as
possible based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereto held by each holder of
Rights.
(c) In the event that the number of shares of Preferred
Stock that are authorized by the Company's Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company may, at its
option, take all such action as may be necessary to authorize additional
shares of Preferred Stock for issuance upon exchange of the Rights.
SECTION 25. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
(ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which is
not prohibited by section 11(o) hereof), 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
33
one or more transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which is not prohibited by Section 11(o) hereof),or (v)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights Certificate
to the extent feasible and in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, 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 shares of Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier; provided, however, no such notice shall
be required pursuant to this Section 25, if any Subsidiary of the Company
effects a consolidation or merger with or into, or effects a sale or other
transfer of assets or earnings power to, any other Subsidiary of the Company.
The failure to give notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company
or the vote upon any such action.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 26. Notices. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
by telex, telegram or cable) and mailed or sent or delivered, if to the
Company, at its address at:
Brake Headquarters U.S.A., Inc.
00-00 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx Xxxx
Xxx Xxxx 00000
Attention: Xxxxxx Xxxx, Chairman of the Board
and if to the Rights Agent, at its address at:
Continental Stock Transfer & Trust Company
Two Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Compliance Department
34
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 27, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) subject to Section 31
hereof, a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of
a certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person hereunder, from the majority of the Board, which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the
Redemption Price, the Purchase Price, the Expiration Date or the number of
Units of Preferred Stock for which a Right is exercisable without the approval
of a majority of the Board. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Company Common Stock.
SECTION 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
shares of Company Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding
shares of Company Common Stock of which any Person is the Beneficial Owner or
holder, shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the Exchange Act Regulations as in effect on the date hereof.
Except as otherwise specifically
35
provided herein, the Board of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to 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 to amend this Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board or by a majority of the Board in good
faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject
the Board or any member thereof to any liability to the holders of the Rights.
SECTION 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of shares of Company Common
Stock).
SECTION 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and a majority of the Board determines in its good faith
judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement and the Rights shall
not then be redeemable, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth Business Day following the date of such determination by a majority of
the Board.
SECTION 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in
and to be performed entirely in such State.
SECTION 33. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original,
but all of which taken together shall constitute one and the same instrument.
36
SECTION 34. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the date first above written.
ATTEST: BRAKE HEADQUARTERS U.S.A, INC.
By By
------------------------ -----------------------------
Name: Name:
Title: Title:
ATTEST: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By By
------------------------- -----------------------------
Name: Xxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Secretary Title: Vice President
37
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
BRAKE HEADQUARTERS U.S.A., INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
BRAKE HEADQUARTERS U.S.A., INC., a corporation organized and existing under
the Gen- eral Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was adopted by the
Board of Directors of the Company as required by Section 151 of the General
Corporation Law of Delaware at a meeting duly called and held on October 2,
1998.
RESOLVED, that pursuant to the authority granted to and vested in the Board of
Directors of the Company (hereinafter called the "Board of Directors" or the
"Board") in accordance with the provisions of the Certificate of Amendment of
Amended and Restated Certificate of Incorporation, as amended to date
(hereinafter called the "Certificate of Incorporation"), the Board of
Directors hereby creates a series of Preferred Stock, par value $.00l per
share (the "Preferred Stock"), of the Company and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:
Series A Junior Participating Preferred Stock.
Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Junior Participating Preferred Stock" (the "Series A
Stock") and the number of shares constituting the Series A Stock shall be
400,000. 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 Series A 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 Company convertible into Series A Stock.
Section 2. Dividends and Distributions. (A) Subject to the rights of
the holders of any shares of any series of preferred stock (or any similar
stock) ranking prior and superior to the Series A Stock with respect to
dividends, the holders of shares of Series A Stock, in preference to the
holders of Common Stock, par value $.001 per share (the "Common Stock"), of
the
i
Company, and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of January,
April, July, and October in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 per annum 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 Series A Stock. In the event
the Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A 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 Company shall declare a dividend or distribution on
the Series A Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, 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 $0.25 per share on the Series A
Stock shall nevertheless by payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A 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 Series A 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 Series A 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
ii
determination of holders of shares of Series A Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Company.
In the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Stock and the
holders of shares of Common Stock and any other capital stock of the Company
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A 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 on the Series A 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 Series A Stock
outstanding shall have been paid in full, the Company 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 Series A 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 Series A
Stock, except dividends paid ratably on the Series A Stock and all
iii
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 Series A Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock of the Company
ranking junior (as to dividends and upon dissolution, liquidation and winding
up) to the Series A Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A 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 Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Stock purchased
or otherwise acquired by the Company in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject
to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Stock unless, prior thereto, the holders of shares of Series A Stock shall
have received $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 Series A 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 (B) to
the holders of shares of stock ranking on a
iv
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Stock, except distributions made ratably on the Series A
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 Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series A Stock were entitled immediately prior to such event under the
proviso in clause (A) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
share of Series A 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 Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A 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 Series A Stock shall not be
redeemable.
Section 9. Rank. The Series A Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of
any other class of Preferred Stock.
Section 10. Amendment. If any proposed amendment to the Certificate
of Incorporation would alter or change the preferences, special rights or
powers given to the Series A Stock so as to affect the Series A Stock adversely,
or would authorize the issuance of a class or classes of
v
stock having preferences or rights with respect to dividends or dissolutions
or the distribution of assets that would be superior to the preferences or
rights of the Series A Stock, then the holders of the Series A Stock shall be
entitled to vote as a series upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of Series A Stock shall be necessary to
the adoption thereof, in addition to such other vote as may be required by the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its Chairman of the Board of Directors and attested
by its Secretary this __th day of ____________, 1998.
----------------------------------
Chairman of the Board of Directors
Attest:
-------------------------
Name:
Title:
vi
Exhibit B
(Form of Rights Certificate]
Certificate No. ______________________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE
RIGHTS AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE
RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
BRAKE HEADQUARTERS U.S.A., INC.
This certifies that ________________________________________ or registered
assigns, is the registered holder of the number of Rights set forth above,
each of which entitles the registered holder thereof, subject to the terms and
conditions of the Rights Agreement dated as of _____________________ __, 1998
(the "Rights Agreement"; terms defined therein are used herein with the same
meaning unless otherwise defined herein) between Brake Headquarters U.S.A.,
Inc., a Delaware corporation (the "Company"), and Continental Stock Transfer &
Trust Company, a New York corporation, as Rights Agent (which term shall
include any successor Rights Agent under the Rights Agreement), to purchase
from the Company at any time after the Distribution Date and prior to the
Expiration Date at the office of the Rights Agent, two units, each unit (a
"Unit") being one one-hundredth of a fully paid and nonassessable share of
Series A Junior Participating Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the
------------------
*The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
vii
Company at the Purchase Price initially of one-third (1/3) of the market price
of a share of the Company Common Stock for each Unit of Preferred Stock, upon
presentation and surrender of this Rights Certificate with the Election to
Purchase and related certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of Units which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per Unit set
forth above shall be subject to adjustment in certain events as provided in
the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by
this Rights Certificate are beneficially owned by an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person or, under certain
circumstances described in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Flip-In Event.
Subsequent to a Flip-In Event, each Right may also be exchanged at
the Company's option at no cost and without payment of the Purchase Price, in
whole or in part, for two Units of Preferred Stock and/or other securities of
the Company deemed to have the same value as Units of Preferred Stock, as set
forth under Section 24 of the Rights Agreement. In certain circumstances
described in the Rights Agreement, the rights evidenced hereby may entitle the
registered holder thereof to purchase capital stock of an entity other than
the Company or receive common stock, cash or other assets, all as provided in
the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
or the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request. This Rights Certificate, with or
without other Rights Certificates, upon surrender at the office of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing an
aggregate number of Rights equal to the aggregate number of Rights evidenced
by the Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company under certain
circumstances at its option at a redemption price of $.0l per Right, payable
at the Company's option in cash or in common stock of the Company, subject to
adjustment in certain events as provided in the Rights Agreement at any time
prior to the earlier of (i) the Distribution Date, or (ii) the Final
Expiration Date.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or
viii
Rights evidenced hereby (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.
Dated: , .
----------------- --- -------
ATTEST: BRAKE HEADQUARTERS U.S.A., INC.
By By
----------------------------- -------------------------------
Name: Name:
Title: Title:
Countersigned:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY, as
Rights Agent
By
------------------------------
Authorized Officer
ix
(Form of Reverse Side of Rights Certificate)
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED _____________________________________________________
hereby sells, assigns and transfers unto
---------------------------------------------------------------------------
(Please print name and address of transferee)
---------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ,
-------------------- --- -----
------------------------------
Signature
Signature Guaranteed:
-----------------------------------------------------------------------------
x
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, [ ] did [ ]
did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: ,
---------------------- --- ----- -----------------------------------
Signature
Signature Guaranteed:
--------------------------------
------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix
a legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
xi
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: BRAKE HEADQUARTERS U.S.A, INC.
The undersigned hereby irrevocably elects to exercise
________________________Rights represented by this Rights Certificate to
purchase the Units of Preferred Stock issuable upon the exercise of the Rights
(or such other securities of the Company or of any other person or other
property which may be issuable upon the exercise of the Rights) and requests
that certificates for such Units be issued in the name of and delivered to:
-------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
Please insert social security
or other identifying
number:
-----------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
-------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
Please insert social security
or other identifying
number:
---------------------------------------
Dated: ,
--------------- --- ----- --------------------------------
Signature
Signature Guaranteed:
xii
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On October 2, 1998, the Board of Directors of Brake Headquarters
U.S.A., Inc. (the "Company"), declared a distribution of one Right for each
outstanding share of Common Stock, par value $.00l per share (the "Company
Common Stock"), to stockholders of record at the close of business on October
13, 1998 and for each share of Company Common Stock issued (including shares
distributed from the treasury) by the Company thereafter and prior to the
Distribution Date. Each Right entitles the registered holder, subject to the
terms of the Rights Agreement (as defined below), to purchase from the Company
two Units of a share (each one-hundredth of a share being a "Unit") of Series
A Junior Participating Preferred Stock, par value $.001 per share (the
"Preferred Stock"), at a Purchase Price of one-third (1/3) of the market value
of a share of the Company Common Stock, subject to adjustment and subject to
the exchange described below, wherein no cash payment will be required to
purchase the Preferred Stock. The Purchase Price is payable in cash or by
certified or bank check or money order payable to the order of the Company.
The description and terms of the Rights are set forth in a Rights Agreement
between the Company and Continental Stock Transfer & Trust Company, as Rights
Agent (the "Rights Agreement").
Copies of the Rights Agreement and the Certificate of Designation
(the "Certificate of Designation") for the Preferred Stock have been filed
with the Securities and Exchange Commission as exhibits to a Current Report on
Form 8-K for October 2, 1998 (the "Form 8-K"). Copies of the Rights Agreement
and the Certificate of Designation are available free of charge from the
Company. This summary description of the Rights and the Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to
all the provisions of the Rights Agreement and Certificate of Designation,
including the definitions therein of certain terms, which Rights Agreement and
Certificate of Designation are incorporated herein by reference.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights
Certificates will be distributed. The Rights will separate from the Company
Common Stock and the Distribution Date will occur upon the earlier of (i) 10
business days (or such later date as may be determined by action of the Board
of Directors) following a public announcement (the date of such announcement
being the "Stock Acquisition Date") that a person or group of affiliated or
associated persons (other than the Company, any Subsidiary of the Company or
any employee benefit plan of the Company or such Subsidiary (an "Exempt
Person")) has without the approval of the Board of Directors (a) obtained the
right to acquire, or otherwise obtained beneficial ownership of, 15% or more
of the then outstanding shares of Company Common Stock, (b) acquired more than
10% of the Company Common Stock (other than any Exempt Person), and proposes
to merge into, or combine with, or acquire assets in excess of $10,000,000
from, the Company, or engage in certain other self-dealing transactions
involving the Company on terms less
xiii
favorable to the Company than from a third party, or (c) increased by 1% or
more a pre-existing 15% Beneficial Ownership or holding (in each case, such
person to be deemed an "Acquiring Person"), provided that such person or group
remains the beneficial owner (or the holder) of the requisite percentage or
more of the outstanding shares of Company Common Stock on such date, and (ii)
10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time that any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock. Until the Distribution Date, (i)
the Rights will be evidenced by Company Common Stock certificates and will be
transferred with and only with such Company Common Stock certificates, (ii)
new Company Common Stock certificates issued after October 13, 1998 (also
including shares distributed from the treasury) will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates representing outstanding Company Common Stock
will also constitute the transfer of the Rights associated with the Company
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights
Agreement unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall
remain outstanding, (ii) a Person becomes the Beneficial Owner of 15% or more
of the then outstanding shares of Company Common Stock, without the approval
of the Board of Directors, and remains the Beneficial Owner of 15% or more of
the outstanding shares of Company Common Stock as of the Distribution Date,
(iii) a Person (including Affiliates or Associates of such Person) who is the
Beneficial Owner of more than 10% of the outstanding shares engages in one or
more of the transactions referred to under (i)(b) of the first paragraph of
this section and as more fully set forth under Section 11(a)(ii)(A) of the
Rights Agreement, or (iv) during such time as there is a Beneficial Owner or
holder of 15% or more of the Company Common Stock, an event occurs which
results in such person's ownership interest or holding being increased by more
than 1%, e.g., by means of a reverse stock split or recapitalization (any
event under (i) through (iv) above, a "Flip-In Event"), then, in each such
case, each holder of a Right will thereafter have the right to receive, upon
exercise, two Units of Preferred Stock (or, in certain circumstances, Company
Common Stock, cash, property or other securities of the Company) at a Purchase
Price of one-third the market price of a share (determined in accordance with
Section 11(d)(i) of the Rights Agreement of the Company Common Stock.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void.
xiv
In the event that, at any time following the Stock Acquisition Date
and without the prior approval of the Board of Directors, (i) the Company is
acquired in a merger or other business combination transaction and the Company
is not the surviving corporation (other than a merger described in the
preceding paragraph), (ii) any Person consolidates or merges with the Company
and all or part of the Company Common Stock is converted or exchanged for
securities, cash or property of any other Person or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as described above)
shall thereafter have the right to receive (in lieu of the original number of
Units which the holder would have received ) upon exercise, two shares of the
common stock of the Acquiring Person for each Right, at a price per share of
one-third (1/3) of the market value per share of such common stock (the market
value of such common stock being determined in the same manner as the market
value of a share of Company Common Stock is determined under Section 11(d)(i)
of the Rights Agreement).
The Board may at its option, at any time after the occurrence of a
"Flip-In Event", but prior to an Acquiring Person (or group) becoming the
Beneficial Owner of 50% or more of the shares of Company Common Stock,
exchange all or part of the then outstanding or exercisable Rights at a ratio
of one Unit (as may be adjusted under the Rights Agreement) per Right.
Thereafter, the holders of such Rights shall only have the right to receive
the Preferred Stock (or equivalents under the Rights Agreement) into which
their Rights have been exchanged. In such event the holders of Rights would
not be obligated to pay the Purchase Price for the Preferred Stock.
The Purchase Price payable, and the number of Units of Preferred
Stock 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 Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the
current market price of the Preferred Stock, or (iii) upon the distribution to
the holders of the Preferred Stock of evidences or indebtedness, cash or
assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until the Distribution Date, a majority of the Company's
Board of Directors may redeem the Rights in whole, but not in part, at a price
of $.0l per Right (subject to adjustment in certain events) (the "Redemption
Price"), payable, at the election of such majority of the Board of Directors,
in cash or shares of Company Common Stock. Immediately upon the action of a
majority of the Company's Board of Directors ordering the redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
xv
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Units of Preferred Stock (or other
consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption
shall be made at such time as the Rights are not redeemable.
Description of Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of
the Rights will be non-redeemable and subordinate to any other shares of
preferred stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend rate of $.0l per Unit ($1.00 per share) but will, in any
event, be entitled to a dividend equal to the per share dividend declared on
the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $1.00 per
Unit or 100 times the aggregate amount to be distributed per share in respect
of a share of Company Common Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock.
In the event of any merger, consolidation or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Stock.
The rights of holders of the Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary anti-dilution provisions.
Because of the nature of the Preferred Stock's dividend and voting
rights, the economic value of one Unit of Preferred Stock that may be acquired
upon the exercise of each Right should approximate the economic value of one
share of Company Common Stock.
xvi
