TANDYCRAFTS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
RIGHTS AGREEMENT
May 19, 1997
Table of Contents
Section Page
1. Certain Definitions
2. Appointment of Rights Agent
3. Issue of Rights Certificates
4. Form of Rights Certificates
5. Countersignature and Registration
6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost, or
Stolen Rights Certificates
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights
8. Cancellation and Destruction of Rights Certificates
9. Reservation and Availability of
Capital Stock
10. Common Stock Record Date
11. Adjustment of Purchase Price, Number, and Kind of Shares or
Number of Rights
12. Certificate of Adjusted Purchase Price or Number of Shares
13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power
14. Fractional Rights and Fractional Shares
15. Rights of Action
16. Agreement of Rights Holders
17. Rights Certificate Holder Not Deemed a Stockholder
18. Concerning the Rights Agent
19. Merger or Consolidation or Change of Name of Rights Agent
20. Duties of Rights Agent
21. Change of Rights Agent
22. Issuance of New Rights Certificates
23. Redemption and Termination
24. Exchange
25. Notice of Certain Events
26. Notices
27. Supplements and Amendments
28. Successors
29. Determinations and Actions by the Board of Directors, Etc.
30. Benefits of this Agreement
31 Severability
32. Governing Law
33. Counterparts
34. Interpretation
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 19, 1997 (the "Agreement"), between
Tandycrafts, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
BACKGROUND
On May 16, 1997 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of common stock, par value $1.00 per share, of the Company
(the "Common Stock") outstanding at the Close of Business on May 29, 1997 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
be adjusted pursuant to the provisions of SECTION 11(P)) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date, each
Right initially representing the right to purchase one share of Common Stock of
the Company upon the terms and subject to the conditions set forth below (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, but does not include
(i) the Company; (ii) any Subsidiary of the Company; (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company; (iv) any
Person organized, appointed or established by the Company for or pursuant
to the terms of any such plan; (v) any person that becomes an Acquiring
Person pursuant to a Permitted Transaction; (vi) any Person that has become
an Acquiring Person inadvertently and, within five Business Days of being
requested by the Company to advise it regarding the same, certifies to the
Company that such Person acquired beneficial ownership of shares of Common
Stock in excess of 14.9% inadvertently or without knowledge of the terms of
the Rights and such certification is accepted as true by a Requisite
Majority acting in good faith, and such Person divests as promptly as
practicable a sufficient amount of Common Stock so that such Person would
no longer hold in excess of 14.9% of the Common Stock then outstanding; and
(vii) any Person that becomes an Acquiring Person solely as a result of a
reduction in the number of outstanding shares of Common Stock in a
transaction that is approved by a Requisite Majority, provided that such
Person will immediately be an Acquiring Person in the event such Person
thereafter acquires any additional shares of Common Stock (other than as a
result of a stock split or stock dividend) while the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding.
(c) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act and in effect on the date of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and will be
deemed to "beneficially own," any securities that:
(i) 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 occurrence of certain events) 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, or otherwise; provided, however, that a Person
will not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange,
(B) securities issuable upon exercise of Rights at any time prior to
the occurrence of a Distribution Date or (C) securities issuable upon
exercise of Rights, which 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 (the "Original Rights") or
pursuant to SECTION 11(I) in connection with an adjustment made with
respect to any Original Rights;
(ii) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement, or understanding,
whether or not in writing; provided, however, that a Person will not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this SECTION 1(D)(II) as a result of an agreement,
arrangement, or understanding to vote such security if such agreement,
arrangement, or understanding: (1) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (2) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such 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 in SECTION 1(D)(II)), or
disposing of any voting securities of the Company;
provided, however, that nothing in this SECTION 1(D) will 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 bona fide firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" means any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date will mean 5:00 p.m., Fort
Worth, Texas time, on such date; provided, however, that if such date is
not a Business Day it will mean 5:00 p.m., Fort Worth, Texas time, on the
next succeeding Business Day.
(g) "Common Stock" means the common stock, par value $1.00 per share,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company will mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(h) "Continuing Director" means any member of the Board of Directors
of the Company who (i) is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person and (ii) was either a member of the Board
of Directors of the Company on the date of this Agreement or who
subsequently became a director of the Company and whose initial election or
initial nomination for election was approved by a majority of the
Continuing Directors then on the Board of Directors of the Company.
(i) "Distribution Date" means the Close of Business on the tenth
Business Day (unless extended by vote of a Requisite Majority) after the
earlier to occur of (i) the Stock Acquisition Date or (ii) the date any
Person commences or publicly announces an intention to commence a tender
offer or exchange offer for the Common Stock which would result in, upon
the consummation of such offer, the Person making such offer, together with
all of its Affiliates and Associates, being the Beneficial Owner of 15% or
more of the Common Stock then outstanding (including any such date that is
after the date of this Agreement and prior to the issuance of the Rights);
provided, however, that if the tender offer or exchange offer that gave
rise to the Distribution Date is cancelled, terminated or otherwise
withdrawn within ten Business Days of its announcement, such offer shall be
deemed never to have been made and no Distribution Date shall occur with
respect thereto.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
(l) "Permitted Transaction" means a stock acquisition or a tender or
exchange offer pursuant to a definitive agreement by which a Person (who is
not at the time an Acquiring Person) would become an Acquiring Person and
which has been approved by a Requisite Majority prior to the execution of
the definitive agreement providing for the acquisition or the public
announcement of the offer, as the case may be.
(m) "Person" means any individual, firm, corporation, partnership,
limited liability company or other public or private entity.
(n) "Redemption Price" with respect to each Right means $.01, as such
amount may from time to time be adjusted in accordance with SECTION 11.
All references herein to the Redemption Price means the Redemption Price as
in effect at the time in question.
(o) "Requisite Majority" means, at any time, the affirmative vote of
a majority of the Continuing Directors then in office.
(p) "Rights Dividend Declaration Date" is May 19, 1997, the date the
Board of Directors of the Company declared a dividend distribution of one
Right for each share of Common Stock outstanding on the Record Date.
(q) "Rights Shares" means the shares of Common Stock issuable or
issued upon the exercise of the Rights.
(r) "Section 11(a)(ii) Event" means any event described in SECTION
11(A)(II).
(s) "Section 13 Event" means any event described in clauses (i),
(ii), or (iii) of SECTION 13(A).
(t) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has
become an Acquiring Person.
(u) "Subsidiary" means, with reference to any Person, any entity of
which an amount of voting securities sufficient to elect at least a
majority of the directors or similar Persons of such entity is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled by
such Person.
(v) "Trading Day" means a day on which the principal national
securities exchange or quotation system on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day.
(w) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company (which, in accordance with
SECTION 3, prior to the Distribution Date are also the holders of the Common
Stock) in accordance with the terms and conditions of this Agreement, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents pursuant to this Section or successor Rights
Agents pursuant to Section 21 as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Prior to the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of this SECTION 3(B)) by the certificates for
the Common Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock will be deemed also to be certificates
for Rights) and not by separate certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the underlying shares
of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, postage prepaid mail, to each record holder of the Common
Stock as of 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 (the "Rights Certificates"), evidencing
one Right for each share of Common Stock so held, subject to adjustment as
provided in this Agreement. In the event that an adjustment in the number
of Rights per share of Common Stock has been made pursuant to SECTION
11(P), at the time of distribution of the Rights Certificates, the Company
will make the necessary and appropriate rounding adjustments (in accordance
with SECTION 14(A)) 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 soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form of
EXHIBIT B, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect
to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common
Stock will also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date (as defined in
SECTION 7), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued will also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights will be issued in respect of all shares of Common Stock
that are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date. Certificates representing such shares of Common
Stock will also be deemed to be certificates for Rights, and will bear the
following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO
CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
TANDYCRAFTS, INC. (THE "COMPANY") AND CHASEMELLON SHAREHOLDER
SERVICES, L.L.C. (THE "RIGHTS AGENT") DATED AS OF MAY 19, 1997
(AS AMENDED FROM TIME TO TIME, THE "RIGHTS AGREEMENT"), THE TERMS
OF WHICH ARE HEREBY INCORPORATED IN THIS CERTIFICATE BY REFERENCE
AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
COMPANY. 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. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (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 the shares of Common Stock issued after the Record
Date, until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates will be evidenced by such certificates alone and registered
holders of Common Stock will also be the registered holders of the
associated Rights, and the transfer of any of such certificates will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse of the rights certificates)
will each be substantially in the form set forth in EXHIBIT A and may have
such marks of identification or designation and such legends, summaries, or
endorsements as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
quotation system 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,
the Rights Certificates, whenever distributed, will be dated as of the
Record Date and on their face will entitle the holders of such Rights
Certificates to purchase such number of shares of Common Stock as is set
forth in such Rights Certificates at the price set forth in such Rights
Certificates (such exercise price per share, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price will be subject to adjustment as provided in this
Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates will be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its Chief
Financial Officer, its President or any Vice President, either manually or
by facsimile signature, will have affixed thereto the Company's seal or a
facsimile thereof, and will be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates will be countersigned by the Rights Agent, either
manually or by facsimile signature and will not be valid for any purpose
unless so countersigned. In case any officer of the Company who has
signed any of the Rights Certificates ceases to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company, and any
Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, is a
proper officer of the Company to sign such Rights Certificate, although at
the date of the execution of this Rights Agreement any such Person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued under this Agreement. Such books will show the names and addresses
of the respective holders of the Rights Certificates, the number of Rights
evidenced on the face of the Rights Certificates, and the date of each of
the Rights Certificates.
Section 6. Transfer, Split Up, Combination, and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates.
(a) Subject to the provisions of SECTION 7(E) and SECTION 14, at any
time after the Distribution Date, and at or prior to the Expiration Date,
any Rights Certificate or Certificates may be transferred, split up,
combined, or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
Rights Shares (or, following a Triggering Event, Common Stock, other
securities, cash, or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine, or exchange any Rights
Certificate or Rights Certificates will make such request in writing
delivered to the Rights Agent, and will surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined, or exchanged at
the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company will be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder has completed
and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and has provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company requests in good
faith. Thereupon, the Rights Agent will, subject to SECTION 4, SECTION
7(E) and SECTION 14, 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 any Rights Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Rights Certificate, and, in case of loss, theft, or
destruction, of indemnity or security satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to SECTION 7(E), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement including, without limitation, the restrictions
on exercisability set forth in SECTION 9(C), SECTION 11(A)(III), SECTION
23(A) and SECTION 24) 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 of the
Rights Certificate duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price for each share of Common Stock
(or other securities, cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior to the earlier of
(i) the Close of Business on May 19, 2007, (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in SECTION 23 or
(iii) the time at which such rights are exchanged as provided in SECTION 24
(the earlier of such times being the "Expiration Date")).
(b) The Purchase Price for each share of Common Stock pursuant to
the exercise of a Right will initially be $30.00, subject to adjustment
from time to time as provided in SECTION 11, and SECTION 13(A). The
Purchase Price will be payable in accordance with SECTION 7(C).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the shares of
Common Stock (or other shares, securities, cash or other assets, as the
case may be) to be purchased and an amount equal to any applicable transfer
tax, the Rights Agent will, subject to SECTION 20(K), promptly (i) (A)
requisition from any transfer agent of the shares of Common Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of shares of Common Stock to be purchased
(the Company hereby irrevocably authorizing its transfer agent to comply
with all such requests) or (B) if the Company has elected to deposit the
shares of Common Stock with a depository agent, requisition from the
depository agent depository receipts representing such number of shares of
Common Stock as are to be purchased (in which case certificates for the
shares of Common Stock represented by such receipts will be deposited by
the transfer agent with the depository agent) and the Company will direct
the depository agent to comply with such request; (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with SECTION 14; (iii) after receipt of such certificates or
depository receipts, cause such certificates or depository receipts to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant to
SECTION 11(A)(III)) will be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the Company
is obligated to issue other securities (including Common Stock) of the
Company, pay cash, or distribute other property pursuant to SECTION 11(A),
the Company will make all arrangements necessary so that such other
securities, cash, or other property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so that only whole
shares of Common Stock would be issued.
(d) If the registered holder of any Rights Certificate exercises less
than all the Rights evidenced by such certificate, a new Rights Certificate
evidencing the unexercised Rights will 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.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by any Person referred to in CLAUSES (I) through (III)
below will become null and void without any further action and no holder of
such Rights will have any rights whatsoever with respect to such Rights,
under any provision of this Agreement or otherwise: (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee from
an Acquiring Person (or from any Associate or Affiliate of an Acquiring
Person) that becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee from an Acquiring Person (or of any such Associate or
Affiliate) that becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement,
or understanding regarding the transferred Rights or (B) a transfer that
the Board of Directors of the Company has determined is part of an
agreement, plan, arrangement, or understanding that has as a substantial
purpose or effect the avoidance of this SECTION 7(E). The Company will use
reasonable efforts to insure that the provisions of this SECTION 7(E) and
SECTION 4(B) are complied with, but will have no liability under this
Agreement to any holder of Rights Certificates or other Person as a result
of its failure to make any determinations with respect to an Acquiring
Person, or any of its Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this SECTION 7 unless such registered
holder has (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
requests in good faith.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, 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, will be cancelled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
cancelled Rights Certificates to the Company, or will, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
will deliver a certificate of destruction to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company will use its best efforts to reserve and keep
available out of its authorized and unissued shares of Common Stock (and/
or other securities) or its authorized and issued shares of Common Stock
(and/or other securities) held in its treasury, the number of shares of
Common Stock (and/or other securities) that will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on
any national securities exchange or automated quotation system, the Com-
pany will use its reasonable efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange or automated quotation system upon official notice
of issuance upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) Event on
which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with SECTION 11(A)(III), a
registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights or issued in an exchange pursuant
to SECTION 24 on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Expiration Date. The Company will also
take such action as may be appropriate under, or to ensure compliance with,
the applicable state securities laws in connection with the exercisability
of the Rights. The Company may temporarily suspend, for up to 90 days
after the date described in CLAUSE (I) of this SECTION 9(C), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company will 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 no longer remains in effect. In addition,
if the Company determines that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement
has been declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights will not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, the exercise of such Rights is not permitted under
applicable law, or a registration statement has not been declared
effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock
(and/or other securities) delivered upon exercise of Rights will, at the
time of delivery of the certificates for such shares upon payment of the
Purchase Price, be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and any Common Stock or other certificates issued upon the
exercise of Rights. The Company will not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of
Common Stock (or other securities, as the case may be) in respect of a name
other than that of the registered holder of the Rights Certificates or to
issue or deliver any Common Stock or other certificates in a name other
than that of the registered holder until such tax has 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. Common Stock Record Date. Each Person in whose name any
Rights Share certificate is issued will, for all purposes, be deemed to have
become the record holder of such Rights Shares represented thereby, and such
certificate will be dated, on the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such Person will be deemed to have become the record holder of the Rights Shares
on, and such certificate will be dated, the next succeeding Business Day on
which the Common Stock (or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the Rights Certificate holders will not be entitled to any stockholder rights
with respect to Rights Shares, including, without limitation, the right to vote,
to receive dividends or other distributions, or to exercise any preemptive
rights, and will not be entitled to receive any notice of any proceedings of the
Company, except as provided in this Agreement.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares, or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of this
Agreement (A) declares a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivides the outstanding Common Stock,
(C) combines the outstanding Common Stock into a smaller number of
shares, or (D) issues any shares of its capital stock in a
reclassification of the Common Stock (including, without limitation,
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this SECTION 11(A) and SECTION 7(E),
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Common Stock or
capital stock, as the case may be, issuable on such date, will be
proportionately adjusted so that the holder of any Right exercised
after such time will be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Common Stock or capital stock, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time
when the Common 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 that would require an adjustment
under both this SECTION 11(A)(I) and SECTION 11(A)(II), the adjustment
provided for in this SECTION 11(A)(I) will be in addition to, and will
be made prior to, any adjustment required pursuant to SECTION
11(A)(II).
(ii) In the event that any Person, alone or together with its
Affiliates and Associates, at any time after the Rights Dividend
Declaration Date, becomes an Acquiring Person, then, proper provision
will be made so that each Right holder (except as provided in SECTION
7(E)) will thereafter have the right to receive, upon exercise of such
Right at the then current Purchase Price in accordance with the terms
of this Agreement, such number of Rights Shares equal to the result
obtained by (x) multiplying the then current Purchase Price by the
then number of Rights Shares for which a Right is then exercisable and
(y) dividing that product by 50% of the Current Market Price (defined
in SECTION 11(D)) per share of Common Stock on the date such Person
became an Acquiring Person (such number of Rights Shares, the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
that are authorized by the Company's articles of incorporation but not
issued, or issued but not outstanding, are not sufficient to permit
the exercise in full of the Rights in accordance with SECTION
11(A)(II), the Company will, upon the exercise of a Right and payment
of the applicable Purchase Price, (A) determine the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), and (B) with respect to each Right (subject to SECTION 7(E)),
make adequate provision to substitute for the Adjustment Shares (1)
cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock), that a Requisite Majority has
deemed to have essentially the same rights, privileges and preferences
as shares of Common Stock ("Common 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 Current Value,
where such aggregate value has been conclusively determined by a
Requisite Majority based upon the advice of a nationally recognized
investment banking firm selected by a Requisite Majority; provided,
however, that if the Company has not made adequate provision to
deliver value pursuant to CLAUSE (B) above within 30 days following
the first occurrence of a Section 11(a)(ii) Event, then the Company
will be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash,
which shares or cash have an aggregate value equal to the Spread. The
term "Spread" means the excess of (i) the Current Value over (ii) the
Purchase Price. If the Board of Directors determines in good faith
that it is likely that sufficient additional shares of Common 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 Section 11(a)(ii)
Triggering Event, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such 30-day
period, as it may be extended, being the "Substitution Period"). To
the extent that action is to be taken pursuant to this SECTION
11(A)(III), the Company (1) will provide, subject to SECTION 7(E),
that such action will apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any required shareholder
approval or to decide the appropriate form of distribution to be made
and the value thereof. In the event of any such suspension, the
Company will 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 no longer
remains in effect. For purposes of this SECTION 11(A)(III), the
Current Value of each Adjustment Share will be the Current Market
Price per share of the Common Stock on the effective date of the
Section 11(a)(ii) Event and the per share or per unit value of any
Common Stock Equivalent will be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(b) In case the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them
to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Common Stock (and/or Common Stock Equivalents) (or
securities convertible into Common Stock) at a price per share of Common
Stock (or having a conversion price per share, if a security convertible
into Common Stock) less than the Current Market Price per share of Common
Stock on such record date, the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, (i) the numerator of
which is the number of shares of Common Stock outstanding on such record
date, plus the number of shares of Common Stock that the aggregate offering
price of the total number of shares of Common Stock (and/or Common Stock
Equivalents) so to be offered (or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and (ii) the denominator of which is the number of shares of
Common Stock outstanding on such record date, plus the number of additional
shares of Common Stock (and/or Common Stock Equivalents) to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In the event that the number of shares
of Common Stock issuable under the terms of a convertible security, or the
conversion or exercise price of such convertible security, changes after
the initial issuance of such convertible security, an adjustment will be
made to the Purchase Price that conforms with the adjustment set forth in
this SECTION 11(B). In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration will be as conclusively determined in
good faith by the Board of Directors of the Company, whose determination
will be described in a statement filed with the Rights Agent and will be
binding on the Rights Agent and the holders of the Rights. Shares of
Common Stock owned by or held for the account of the Company will be deemed
not to be outstanding for the purpose of any such computation. Such
adjustment will be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the
Purchase Price will be adjusted to be the Purchase Price that would then be
in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Common Stock, but
including any dividend payable in stock other than Common Stock) or
subscription rights or warrants (excluding those referred to in SECTION
11(B)), the Purchase Price to be in effect after such record date will be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, (i) the numerator of which is the Current
Market Price per share of Common Stock on such record date, less the fair
market value (as conclusively determined in good faith by the Board of
Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent) of the portion of the cash, assets,
or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Common Stock and (ii) the
denominator of which is such Current Market Price per share of Common
Stock. Such adjustments will be made successively whenever such a record
date is fixed, and in the event that such distribution is not so made, the
Purchase Price will be adjusted to be the Purchase Price that would have
been in effect if such record date had not been fixed.
(d) The "Current Market Price" per share of Common Stock on any date
will be deemed to be the average of the daily closing prices per share of
such Common Stock for the 30 consecutive Trading Days immediately prior to
such date; provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a period following
the announcement by the issuer of such Common Stock of (i) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the
Rights), or (ii) any subdivision, combination, or reclassification of such
Common Stock, and the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination, or reclassification
has not occurred prior to the commencement of the requisite 30 Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price will be properly adjusted to take into account ex-dividend trading.
The closing price for each day will be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock 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 shares of Common
Stock are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board of Directors. If on any
such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the Board
of Directors will be used. If the Common Stock is not publicly held or not
so listed or traded, Current Market Price per share will mean the fair
value per share as determined in good faith by the Board of Directors, the
determination of which will be described in a statement filed with the
Rights Agent and will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary notwithstanding, no
adjustment in the Purchase Price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments that by reason of
this SECTION 11(E) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under
this SECTION 11 will be made to the nearest cent or to the nearest one-
hundredth of a share of Common Stock. Notwithstanding the first sentence
of this SECTION 11(E), any adjustment required by this SECTION 11 will be
made no later than the earlier of (i) three (3) years from the date of the
transaction that mandates such adjustment or (ii) the Final Expiration
Date.
(f) If, as a result of an adjustment made pursuant to SECTION
11(A)(II) or SECTION 13(A), the holder of any Right thereafter exercised
becomes entitled to receive any shares of capital stock other than Common
Stock, then the number of such other shares so receivable upon exercise of
any Right and the Purchase Price will 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 Common Stock contained in SECTIONS 11(A),
(B), (C), (E), (G), (H), (I), (J), (K), (M), and (Q) and the provisions of
SECTIONS 7, 9, 10, 13, and 14 with respect to the Common Stock will 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 under this Agreement will evidence
the right to purchase, at the adjusted Purchase Price, the number of Rights
Shares purchasable from time to time under this Agreement, all subject to
further adjustment as provided in this Agreement.
(h) Unless the Company has exercised its election as provided in
SECTION 11(I), upon each adjustment of the Purchase Price as a result of
the calculations made in SECTIONS 11(B) and (C), each Right outstanding
immediately prior to the making of such adjustment will thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of
Rights Shares (calculated to the nearest one-hundredth) obtained by (i)
multiplying (x) the number of Rights Shares covered by a Right immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Rights Shares purchasable upon the exercise of
a Right. Each of the Rights outstanding after such an adjustment in the
number of Rights will be exercisable for the number of Rights Shares 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 will
become that number of Rights (calculated to the nearest one-hundredth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company will 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, will be at least ten Business Days
later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to
this SECTION 11(I), the Company will, as promptly as practicable, cause to
be distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to SECTION 14, the additional
Rights to which such holders are entitled as a result of such adjustment,
or, at the option of the Company, will 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 are entitled after such
adjustment. Rights Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for in this Agreement
(and may bear, at the option of the Company, the adjusted Purchase Price)
and will 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 Rights Shares, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Rights Shares and the
number of Rights Shares that were expressed in the initial Rights
Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of
Rights Shares, the Company will take any corporate action that may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue such number of fully paid and nonassessable Rights Shares
at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event
the issuance to the holder of any Right exercised after such record date
the number of Rights Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
Rights Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company will 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 will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and
to the extent that, in its good faith judgment, the Board of Directors of
the Company determines it to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for
cash of any shares of Common Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Common Stock or securities that
by their terms are convertible into or exchangeable for shares of Common
Stock, (iv) stock dividends, or (v) issuance of rights, options, or
warrants referred to in this SECTION 11, hereafter made by the Company to
holders of its Common Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
SECTION 11(O)), (ii) merge with, from, or into any other Person (other than
a Subsidiary of the Company in a transaction that complies with SECTION
11(O)), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, 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 or any of its Subsidiaries in one or
more transactions each of which complies with SECTION 11(O)), if (x) at the
time of or immediately after such consolidation, merger, or sale there are
any rights, warrants, or other instruments or securities outstanding or
agreements in effect that could reasonably be expected to substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with, or immediately after, such
consolidation, merger, or sale, the stockholders of the Person that
constitutes, or would constitute, the "Principal Party" for purposes of
SECTION 13(A) have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by SECTION 23 or SECTION 27, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declares a dividend
on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding shares of Common Stock, or (iii)
combines the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, will be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event will equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which is the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event
and the denominator of which is the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company, by action of a Requisite Majority,
may permit the Rights, subject to SECTION 7(E), to be exercised for 50% of
the shares of Common Stock (or cash or other securities or assets to be
substituted for the Adjustment Shares pursuant to SECTION 11(A)(III)) that
would otherwise be purchasable under SECTION 11(A) in consideration of the
surrender to the Company of the Rights so exercised and without other
payment of the Purchase Price. Rights exercised under this SECTION 11(Q)
will be deemed to have been exercised in full and will be cancelled.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in SECTION 11 or SECTION 13, the
Company will (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common 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 Common Stock) in accordance with SECTION 25.
The Rights Agent will be fully protected in relying on any such certificate and
on any adjustment contained in such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Except in a Permitted Transaction, in the event that, following
the Stock Acquisition Date, directly or indirectly, (i) the Company
consolidates with, or merges with, or into, any other Person (other than a
Subsidiary of the Company in a transaction that complies with SECTION
11(O)), and the Company is not the continuing or surviving Person of such
consolidation or merger; (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with SECTION 11(O)) consolidates
with, or merges with, or into, the Company, and the Company is 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 Common Stock is changed into or exchanged for stock
or other securities of any other Person or cash or any other property; or
(iii) the Company sells or otherwise transfers (or one or more of its
Subsidiaries sells or otherwise transfers), in one transaction or a series
of related 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 Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with SECTION 11(O)), then, and in each such case (except as
contemplated by SECTION 13(D)), proper provision will be made so that (A)
each holder of a Right, except as provided in SECTION 7(E) or SECTION
13(E), will thereafter have the right to receive, upon the exercise of such
Right at the then current Purchase Price in accordance with the terms of
this Agreement, such number of validly authorized and issued, fully paid,
nonassessable, and freely tradable shares of Common Stock of the Principal
Party (as defined below), not subject to any liens, encumbrances,
preemptive rights, rights of first refusal, or other adverse claims, as are
equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of Rights Shares for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such Rights Shares for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first occurrence), and (2) dividing that product (which, following
the first occurrence of a Section 13 Event, will be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by
50% of the Current Market Price per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (B)
such Principal Party will thereafter be liable for, and will assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" will thereafter
be deemed to refer to such Principal Party, it being specifically intended
that the provisions of SECTION 11 will apply only to such Principal Party
following the first occurrence of a Section 13 Event; (D) such Principal
Party will 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 assure that
the provisions of this Agreement will thereafter be applicable, as nearly
as may be, in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights; and (E) the provisions of SECTION
11(A)(II) will be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" means
(i) in the case of any transaction described in CLAUSE (I) or
(II) of the first sentence of SECTION 13(A), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in CLAUSE (III) of
the first sentence of SECTION 13(A), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so
registered, "Principal Party" will refer to such other Person; and (2)
in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, with Common Stock that is and has been so registered,
"Principal Party" will refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company will not consummate any such consolidation, merger,
sale, or transfer unless the Principal Party has a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance
with this SECTION 13 and unless prior thereto the Company and such
Principal Party have executed and delivered to the Rights Agent a
supplemental agreement providing for the Principal Party to assume and
perform the terms set forth in SECTIONS 13(A) and (B) and further providing
that, as soon as practicable after the date of any consolidation, merger,
or transfer mentioned in SECTION 13(A), the Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In the event that the Rights become exercisable under SECTION
13(A), the Company, by action of a Requisite Majority, may agree with the
Principal Party that the Principal Party may permit the Rights to be
exercised for 50% of the Common Shares of the Principal Party that would
otherwise be purchasable under SECTION 13(A), in consideration of the
surrender to the Principal Party, as the successor to the Company under
SECTION 13(A)(II), of the Rights so exercised and without other payment of
the Purchase Price. Rights exercised under this SECTION 13(E) will be
deemed to have been exercised in full and cancelled.
(e) The provisions of this SECTION 13 will similarly apply to
successive mergers, consolidations, and sales or other transfers. In the
event that a Section 13 Event occurs at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been
exercised will thereafter become exercisable in the manner described in
SECTION 13(A).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company will not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in SECTION 11(P), or to
distribute Rights Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there will be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this SECTION 14(A),
the current market value of a whole Right will 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 will be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value of the
Rights on such date as conclusively determined in good faith by the Board
of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as provided in this
Agreement an amount in cash equal to the same fraction of the Current
Market Price of one share of Common Stock as of the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights, expressly
waives the right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this SECTION 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the Rights consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer,
and with the appropriate forms and certificates fully executed;
(c) subject to SECTION 6(A) and SECTION 7(F), the Company and the
Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, will be affected
by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, 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 will use its reasonable best efforts to have any such order,
decree, or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor will anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in SECTION 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate have been exercised in accordance with the provisions of this
Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties under this Agreement. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith, or
willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including, without limitation, the
costs and expenses of defending against any claim of liability. Except if
caused by the gross negligence, willful misconduct or bad faith of the
Rights Agent, in no case will the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has
been advised of the possibility of such loss or damage.
(b) The Rights Agent will be protected and will 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 Common Stock or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to
be signed, executed, and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into or with which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent is a party, or any corporation succeeding to
the corporate trust or shareholder services business of the Rights Agent or
any successor Rights Agent, will be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement; provided, however,
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of SECTION 21. In case at the time such
successor Rights Agent succeeds to the agency created by this Agreement,
any of the Rights Certificates 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 have
not 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
will 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 is changed and
at such time any of the Rights Certificates 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 have not 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 will
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 of such Rights Certificates, will 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 will 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 deems it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or suffering any action under
this Agreement, such fact or matter (unless other evidence in respect of
such fact or matter is specifically prescribed in this Agreement) may be
deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary, or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable under this Agreement only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will 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 will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution of this Agreement by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate
(except its countersignature); nor will it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor will it be responsible for any adjustment
required under the provisions of SECTION 11 or SECTION 13, or responsible
for the manner, method, or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor will
it by any act under this Agreement be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock will, when so issued, be validly
authorized or issued, fully paid, or nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this
Agreement from the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and it will 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.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, 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 in this Agreement will
preclude the Rights Agent from acting in any other capacity for the Company
or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested by this Agreement in it or perform any duty under this
Agreement either itself or by or through its attorneys or agents, and the
Rights Agent will not be answerable or accountable for any act, default,
neglect, or misconduct of any such attorneys or agents or for any loss to
the Company resulting from any such act, default, neglect, or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment of such Person.
(j) No provision of this Agreement will 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 under this Agreement or in the
exercise of its rights if there are reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
or 2 of such certificate, the Rights Agent will not take any further action
with respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common 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 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who will, with such notice, submit such holder's 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, will be a corporation organized and doing business under the
laws of the United States or a State of the United States, in good standing,
that is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and that has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $25,000,000. After appointment, the successor Rights Agent will 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, except that
the predecessor Rights Agent will deliver and transfer to the successor Rights
Agent any property at the time held by it under this Agreement and execute and
deliver any further assurance, conveyance, act, or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
will file notice of such appointment in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the Common Stock, and mail
a notice of such appointment 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 in such notice, will not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, in its discretion, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number, kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the Expiration Date, the Company (a) will, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion, or exchange of securities
issued by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (y) no such Rights Certificate will be issued
if, and to the extent that, the Company is 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 (z)
no such Rights Certificate will be issued if, and to the extent that,
appropriate adjustment has otherwise been made in lieu of the issuance of such
Rights Certificate.
Section 23. Redemption and Termination.
(a) The Company may, at its option, by action of a Requisite
Majority, at any time prior to the earlier of (i) the Distribution Date, or
(ii) the Final Expiration Date, redeem all but not fewer than all the then
outstanding Rights at the Redemption Price (the date of such redemption,
the "Redemption Date"), and the Company, at its option, may pay the
Redemption Price either in cash or Common Stock or other securities of the
Company, deemed by the Board of Directors, in the exercise of its sole
discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of a Requisite Majority ordering the
redemption of the Rights, evidence of which has been filed with the Rights
Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the
holders of Rights will be to receive the Redemption Price. Promptly after
the action of a Requisite Majority ordering the redemption of the Rights,
the Company will give notice of such redemption to the Rights Agent and to
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 the Common Stock. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Any notice that is mailed in the manner in
this Agreement provided will be deemed given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail, or
any defect in the notice, to any particular holder of Rights shall not
affect the sufficiency of the notice to other holders of Rights.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after a Triggering Event, exchange all or part of the then outstanding
and exercisable Rights (which will not include Rights that have become void
pursuant to the provisions of SECTION 7(E) hereof) for shares of Common
Stock, each Right being exchangeable for one share of Common Stock,
appropriately adjusted to reflect any transaction specified in SECTION
11(A)(I) occurring after the Record Date (such number of shares of Common
Stock issuable in exchange for one Right being referred to herein as the
"Exchange Shares"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any of its Subsidiaries or any Person or
entity organized, appointed or established by the Company for or pursuant
to the terms of any such Plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the Common
Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this SECTION 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive the Exchange Shares. 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 that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of SECTION 7(E) hereof) held by
each holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
issued but not outstanding, or authorized but unissued, to permit any
exchange of Rights as contemplated in accordance with this SECTION 24, the
Company shall take all such action as may be necessary to authorize
additional Common Stock for issuance upon exchange of the Rights or shall
take such other action specified in SECTION 11(A)(III) hereof.
(d) The Company shall not be required to issue fractions of shares of
Common Stock to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to
the same fraction of the Current Market Price of a whole share of Common
Stock. For the purposes of this SUBSECTION (D), the Current Market Value
of a whole share of Common Stock shall be determined as of the Trading Day
immediately prior to the date of exchange pursuant to this SECTION 24.
Section 25. Notice of Certain Events.
(a) In case the Company proposes, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders
of Common Stock or to make any other distribution to the holders of Common
Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of
Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), or
(iv) to effect any consolidation or merger into, or with any other Person
(other than a Subsidiary of the Company in a transaction that complies with
SECTION 11(O)), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, 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 or any of its
Subsidiaries in one or more transactions each of which complies with
SECTION 11(O)), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company will give to each
holder of a Rights Certificate, to the extent feasible and in accordance
with SECTION 26, a notice of such proposed action, which will 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
Common Stock, if any such date is to be fixed, and such notice will be so
given in the case of any action covered by CLAUSE (I) or (II) above at
least 20 days prior to the record date for determining holders of the
shares of Common Stock for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock, whichever is the earlier.
(b) In case of a Triggering Event, then (i) the Company will as soon
as practicable give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 26, a notice of the occurrence of
such event, which will specify the event and the consequences of the event
to holders of Rights under this Agreement, and (ii) all references in
SECTION 25(A) to Common Stock will be deemed thereafter to refer to other
securities, if appropriate.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company will be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Tandycrafts, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Subject to the provisions of SECTION 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent will be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxxx Xxxxx
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 Common Stock) will 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. Supplement and Amendments. The Company, by action of its
Board of Directors, and the Rights Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Rights in order to
cure any ambiguity, to correct or supplement any provision contained in this
Agreement that may be defective or inconsistent with any other provisions in
this Agreement, or to make any other provisions in regard to matters or
questions arising under this Agreement that the Company and Rights Agent may
deem necessary or desirable and that will be consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in adopting this
Agreement; provided, however, that following the Stock Acquisition Date, this
Agreement shall not be amended in any manner that would adversely affect the
basic economic terms of the Rights; provided, further, that, once the Rights are
no longer redeemable in accordance with SECTION 23 of this Agreement, no
amendment to this Agreement may have the effect of making the Rights redeemable.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind
and inure to the benefit of their respective successors and assigns under this
Agreement.
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
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, will be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company (with, where specifically provided for in this
Agreement, the concurrence of the Continuing Directors) will have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors (with, where specifically
provided for in this Agreement, the concurrence of the Continuing Directors) or
to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (a)
interpret the provisions of this Agreement, and (b) 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, to amend the Agreement or to extend the Distribution Date). All such
actions, calculations, interpretations and determinations (including, for
purposes of CLAUSE (Y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors (with, where specifically provided
for in this Agreement, the concurrence of the Continuing Directors) in good
faith, will (x) be final, conclusive, and binding on the Company, the Rights
Agent, the holders of the Rights, and all other parties, and (y) not subject
the Board of Directors or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement will
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 the Common Stock) any legal or
equitable right, remedy, or claim under this Agreement; and this Agreement will
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 the 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 will remain in
full force and effect and will in no way be affected, impaired, or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant, or restriction is held by such
court or authority to be invalid, void, or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in SECTION 23 will
be reinstated and will not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any provision requiring action by a Requisite
Majority is held by any court of competent jurisdiction or other authority to be
invalid, void, or unenforceable, such determination will then be made by the
Board of Directors of the Company in accordance with applicable law and the
Company's articles of incorporation and by-laws.
SECTION 32. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT, AND EACH RIGHTS
CERTIFICATE ISSUED UNDER THIS AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.
Section 34. Interpretation. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to Sections and Exhibits are references
to the Sections of and Exhibits to this Agreement unless the context requires
otherwise. In this Agreement, the word "or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: TANDYCRAFTS, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President and CFO
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title:
Exhibit A
to Rights Agreement
Certificate No. R-
[FORM OF RIGHTS CERTIFICATE]
________ Rights
NOT EXERCISABLE AFTER MAY 19, 2007 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
Rights Certificate
TANDYCRAFTS, INC.
This certifies that _____________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions, and conditions of the Rights
Agreement, dated as of May 19, 1997 (as amended from time to time, the "Rights
Agreement"), between Tandycrafts, Inc., a Delaware corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase
from the Company at any time prior to 5:00 p.m. (Fort Worth, Texas time) on May
19, 2007 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one fully paid, nonassessable share
of Common Stock (the "Common Stock") of the Company, at a purchase price of
$30.00 per share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of shares that may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of May 29, 1997 based on the Common Stock as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Common Stock or other securities, that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
incorporated herein by reference and made a part of this certificate 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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the certain circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
All capitalized terms not otherwise defined have the meaning set forth in the
Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate, or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person who,
after such transfer, became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, such Rights will become null and void and no holder of this
certificate will have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered have
entitled such holder to purchase. If this Rights Certificate is exercised in
part, the holder will be entitled to receive upon surrender of this certificate
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 at its option at a redemption
price of $0.01 per Right. In addition, in certain circumstances the Rights may
be exchanged, in whole or in part, for shares of the Common Stock. Immediately
upon the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than
Rights that are not subject to such exchange) will terminate and the Rights will
only enable holders to receive the shares issuable upon such exchange. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
the Rights will require the concurrence of a majority of the Continuing
Directors.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company that may at any time be issuable on the
exercise hereof, nor will anything contained in the Rights Agreement or herein
be construed to confer upon the holder of this certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate have been
exercised as provided in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________________
ATTEST: TANDYCRAFTS, INC.
By:
---------------------- -----------------------
Title:
-----------------------
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By ----------------------
Authorized Signature
[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 transfer 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. The undersigned acknowledges
that this Assignment is voidable by the Company if it contains any material
misstatement of fact by the transferor.
Dated: -----------------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
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);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: -----------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
FORM OF ELECTION TO PURCHASE
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.
To: TANDYCRAFTS, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number:
---------------
Please print name and address:
-------------------------------------------
If such number of Rights are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will be
registered in the name of and delivered to:
Please insert social security or other identifying number:
----------------
Please print name and address:
-------------------------------------------
The undersigned acknowledges that this Election to Purchase is voidable by
the Company if it contains any material misstatement of fact by the undersigned.
Dated: --------------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
an Adverse Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated: --------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
Exhibit B
to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF TANDYCRAFTS, INC. COMMON STOCK
On May 19, 1997, the Board of Directors of Tandycrafts, Inc. (the
"Company") declared a dividend of one common share purchase right (a "Right")
for each outstanding share of common stock, $1.00 par value per share (the
"Common Shares"), of the Company. The dividend was made to the shareholders of
record at the close of business on May 29, 1997 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one Common Share, at
a price of $30.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of May 19, 1997 (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten Business Days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares (an "Acquiring Person") or (ii) ten Business
Days following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of such outstanding
Common Shares (the earlier of such dates being the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached to the certificate. A majority of the
Continuing Directors (not associated with Acquiring Person) may in their
discretion vote to extend the Distribution Date.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding even without such notation or a copy of this Summary
of Rights being attached to such Certificate, will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 19, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable and the number of Common Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the then
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets or of
subscription rights or warrants (other than those referred to above).
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 15% or more of the Common Shares), provision will be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will then be void), will have the right to purchase from
the Company upon exercise that number of Common Shares having a market value of
two times the applicable exercise price of the Right ($30.00).
The Rights Agreement excludes from the definition of Acquiring Persons
Persons who certify to the Company that they inadvertently acquired in excess of
14.9% of the outstanding Common Shares and thereafter divest such excess Common
Shares or who acquire 15% or more of the Common Shares in a Permitted
Transaction. A "Permitted Transaction" is a stock acquisition or tender or
exchange offer pursuant to a definitive agreement which would result in a person
beneficially owning 15% or more of the Common Shares and which has been approved
by the Board of Directors (including a majority of the Continuing Directors)
prior to the execution of the agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a Right
will have the right to purchase from the acquiring company, upon the exercise of
the Right at the then applicable exercise price, that number of shares of common
stock of the acquiring company that at the time of such transaction will have a
market value of two times the applicable exercise price of the Right ($30.00).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and, in lieu of
such fractional shares, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one share of
Common Stock per Right, subject to adjustment. However, the Board of Directors
cannot conduct an exchange at any time after any Person, together with its
Affiliates and Associates, becomes the Beneficial Owner of 50% or more of the
outstanding Common Stock.
At any time prior to a Distribution Date, a Requisite Majority may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). In addition, the Board of Directors may extend or reduce
the period during which the Rights are redeemable, so long as the Rights are
redeemable at the time of such extension or reduction. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to extend the Final Expiration Date, except that from and after the date any
Person becomes an Acquiring Person, no such amendment may adversely affect the
economic interests of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote, or to receive dividends.
