Exhibit 4.9
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YOUNG & RUBICAM INC.
AND
THE BANK OF NEW YORK
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Rights Agent
Rights Agreement
Dated as of May 1, 1998
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TABLE OF CONTENTS
Section Page
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1 Certain Definitions................................ 1
2 Appointment of Rights Agent........................ 7
3 Issue of Right Certificates........................ 7
4 Form of Right Certificates......................... 9
5 Countersignature and Registration.................. 9
6 Transfer, Split Up, Combination
and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates.......................... 10
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights ......................... 11
8 Cancellation of Right Certificates................. 13
9 Reservation and Availability of Capital Stock...... 13
10 Preferred Share Record Date........................ 15
11 Adjustment of Purchase Price, Number of Shares or
Number of Rights................................... 15
12 Certification of Adjusted
Purchase Price or Number of Shares ................ 23
13 Consolidation, Merger or Sale
or Transfer of Assets or Earning
Power............................................. 23
14 Fractional Rights and Fractional Shares............ 27
15 Rights of Action................................... 28
16 Agreement of Right Holders......................... 29
17 Right Certificate Holder
Not Deemed a Stockholder .......................... 30
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Section Page
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18 Concerning the Rights Agent........................ 30
19 Merger or Consolidation or
Change of Name of Rights Agent .................... 30
20 Duties of Rights Agent............................. 31
21 Change of Rights Agent............................. 34
22 Issuance of New Right Certificates................. 35
23 Redemption......................................... 35
24 Exchange........................................... 36
25 Notice of Certain Events........................... 37
26 Notices............................................ 38
27 Supplements and Amendments......................... 39
28 Successors......................................... 40
29 Benefits of this Agreement......................... 40
30 Severability....................................... 40
31 Determination and Actions by the
Board of Directors, etc. .......................... 40
32 Governing Law...................................... 41
33 Counterparts....................................... 41
34 Descriptive Headings............................... 41
Exhibit A Form of Certificate of Designations
Exhibit B Form of Right Certificate
ii
RIGHTS AGREEMENT
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This Rights Agreement, dated as of May 1, 1998,
between Young & Rubicam Inc., a Delaware corporation (the
"Company"), and The Bank of New York, a New York banking
corporation, as Rights Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the board of directors of the Company (the "Board of
Directors") has authorized and declared a dividend of one right
(a "Right") for each share of Common Stock of the Company
outstanding immediately prior to the date and time of
consummation of the Company's initial public offering of shares
of Common Stock (the "Record Date"), and has further authorized
and directed the issuance of one Right (subject to adjustment)
with respect to each share of Common Stock that shall become
outstanding (whether originally issued or delivered from the
Company's treasury) between the Record Date and the earlier of
the Distribution Date and the Expiration Date, including any
shares of Common Stock issued in connection with the initial
public offering of the shares of Common Stock, each Right
initially representing the right to purchase one one-hundredth of
a Preferred Share upon the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean (i) any Person
(other than the H&F Investors and other than any Permitted H&F
15% Transferee), who or which, together with all Affiliates and
Associates of such Person, shall be or become the Beneficial
Owner of fifteen percent (15%) or more of the then outstanding
shares of Common Stock (other than as a result of an Approved
Offer), (ii) the H&F Investors, if after the Record Date, the H&F
Investors, together with all of their Affiliates and Associates,
shall acquire Beneficial Ownership of any additional shares of
Common Stock, such that following the acquisition of such
additional shares of Common Stock, (A) the H&F Investors
beneficially own fifteen percent (15%) or more of the then
outstanding shares of Common Stock, and, (B) if the Management
Voting Trust is then in existence, following the acquisition of
such additional shares of Common Stock, the H&F Investors
beneficially own a greater percentage of the Diluted Shares
Outstanding than the percentage of the Diluted Shares Outstanding
subject to the Management Voting Trust at the time of the
acquisition of such additional shares of Common Stock (it being
understood that neither sales by, nor termination of, the
Management Voting Trust shall result in the H&F Investors
becoming an Acquiring Person pursuant to this clause (ii) absent
a subsequent acquisition of beneficial ownership of additional
shares of Common Stock by the H&F Investors or any of their
Affiliates or
Associates) or (iii) any person who or which is a Permitted H&F
15% Transferee, if contemporaneously with or subsequent to the
Transfer from the H&F Investors that resulted in such Person
becoming a Permitted H&F 15% Transferee, such Permitted H&F 15%
Transferee, together with all of its Affiliates and Associates,
shall purchase or otherwise become the Beneficial Owner of any
additional shares of Common Stock; provided, however, that (w) a
Person shall not become an Acquiring Person if such Person,
together with all of its Affiliates and Associates, shall become
the Beneficial Owner of fifteen percent (15%) or more of the then
outstanding shares of Common Stock (in the case of clause (i)
above) as a result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of shares of
Common Stock by the Company, unless and until such time as such
Person shall purchase or otherwise become (as a result of actions
taken by such Person or any of its Affiliates or Associates) the
Beneficial Owner of any additional shares of Common Stock; (x)
"Acquiring Person" shall not include any Company Entity; and (y)
"Acquiring Person" shall not include any Person who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifteen percent (15%) or more of
the then outstanding shares of Common Stock (in the case of
clause (i) above) or any additional shares of Common Stock (in
the case of clauses (ii) and (iii) above) but who acquired
beneficial ownership of shares of Common Stock inadvertently, and
such Person promptly (and in any event within ten (10) Business
Days after being so requested by the Company) enters into an
irrevocable commitment satisfactory to the Board of Directors
promptly (and in any event within twenty (20) Business Days or
such shorter period as shall be determined by the Board of
Directors) to divest, and thereafter promptly divests as required
by such commitment, sufficient shares of Common Stock so that
such Person, together with all of its Affiliates and Associates,
ceases to be a Beneficial Owner of fifteen percent (15%) or more
of the then outstanding shares of Common Stock (in the case of
clause (i) above) or such additional shares of Common Stock (in
the case of clauses (ii) and (iii) above).
"Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
(b) "Approved Offer" shall mean a tender or exchange
offer for all outstanding shares of Common Stock which is at a
price and on terms approved, prior to the acceptance for payment
of shares under such tender or exchange offer, by the Board of
Directors.
(c) "Associate" shall include (x) any Person included in
the definition of "Associate" in Rule 12b-2 under the Exchange
Act, as in effect on the date of this Agreement, and (y) any
Affiliate of any such Person.
(e) A Person shall be deemed the "Beneficial Owner" of,
and to have "beneficial ownership" of, and to "beneficially own"
any securities:
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns or may be deemed to
beneficially own, directly or indirectly (as determined pursuant
to Rule 13d-3 or 13d-5 under the Exchange Act as in effect on the
date of this Agreement);
(ii) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly, (A) the
right to acquire (whether such right is exercisable immediately
or only after the passage of time or the satisfaction of one or
more conditions or both) pursuant to any agreement (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), arrangement or understanding (whether in writing or
not), or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
to be the Beneficial Owner of, or to beneficially own, any
security solely because such security has been tendered pursuant
to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered security is
accepted for payment or exchange); or (B) the right to vote or
dispose of, or to direct the vote or disposition of, alone or in
concert with others, pursuant to any agreement, arrangement or
understanding (whether in writing or not); provided, however,
that a Person shall not be deemed pursuant to this clause (ii)(B)
to be the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote,
or direct the vote of, such security (1) arises solely from a
revocable proxy or consent given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy
or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act and
(2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report), other than
solely by reason of the existence of such revocable proxy or
consent; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering
of securities), arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy or consent as described in clause
(ii)(B) of this paragraph) or disposing of any securities of the
Company.
Except as otherwise provided in Section 2(k) hereof, if a Person
shall be deemed to be the Beneficial Owner of any securities
which are not outstanding, such securities shall be deemed to be
outstanding for purposes of determining the percentage of the
then outstanding shares of Common Stock beneficially owned by
such Person but all other securities (including securities of the
same class) not actually outstanding shall not be deemed
outstanding for such purposes.
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(g) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(h) "close of business" on any given date shall mean
5:00 P.M., New York City time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
New York City time, on the next succeeding Business Day.
(i) "Common Stock" shall mean the Common Stock, par
value $0.01 per share, of the Company (as it may be constituted
from time to time during the term of this Agreement), except that
"Common Stock" when used with reference to any Person other than
the Company (or, in the case of a transaction referred to in
Section 13 hereof, if the Company is the successor to the other
Person referred to in Section 13, or is the surviving
corporation, when thereafter used with reference to the Company)
shall mean the capital stock (or, in the case of a partnership or
other unincorporated entity, the equivalent equity interest) with
the greatest voting power of such Person, together with all
rights and benefits (however denominated or constituted) relating
to such capital stock (including, without limitation, any rights
or warrants to acquire additional shares of such capital stock or
other securities or assets, or to participate in any trust for
the benefit of holders of such shares, or to share in the
benefits of any agreements or other arrangements for the benefit
of such holders), whether or not such rights are yet exercisable,
and together with any other securities which are represented by
the certificates for such shares or are transferred in connection
with transfers of such shares.
(j) "Company Entity" shall mean any of the Company,
any wholly owned Subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any wholly owned
Subsidiary of the Company, any Person or entity holding shares of
Common Stock which was organized, appointed or established by the
Company or any such wholly owned Subsidiary for or pursuant to
the terms of any such plan, the Management Voting Trust, the
Young & Rubicam Restricted Stock Trust (the "Restricted Stock
Trust"), the trustees under the Management Voting Trust or the
Restricted Stock Trust, any Affiliate or Associate of the
Management Voting Trust or the Restricted Stock Trust or any
trustee under either such trust and any group that includes the
Management Voting Trust, the Restricted Stock Trust, any trustee
under either such trust or any Affiliate or Associate thereof.
(k) "Diluted Shares Outstanding" as of any given time
shall mean the sum of (a) the number of shares of Common Stock
then issued and outstanding (including all shares of Common Stock
held in the Restricted Stock Trust) and (b) the number of shares
of Common Stock issuable upon exercise of (1) the HFCP Options
and the Roll-Over Options and (2) all other options, warrants and
rights to acquire, and the conversion of any securities
convertible into, shares of Common Stock, to the extent such
rights to acquire shares of Common Stock are then exercisable.
For purposes of Section 1(a)(ii)(B), when calculating
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the percentage of the Diluted Shares Outstanding owned by the H&F
Investors or the Management Voting Trust, as the case may be, the
H&F Investors or the Management Voting Trust, as the case may be,
shall be deemed to own all shares of Common Stock beneficially
owned by them assuming the exercise of all of their options,
warrants and rights to acquire, and the conversion by them of any
securities convertible into, shares of Common Stock to the
extent, but only to the extent, such rights to acquire shares of
Common Stock are then exercisable by them. For purposes of
calculating the percentage of Diluted Shares Outstanding owned by
the Management Voting Trust, the Management Voting Trust shall be
deemed to own all shares of Common Stock (including all shares of
Common Stock required to be deposited thereunder upon exercise of
vested options) then subject to the Management Voting Trust.
(l) "H&F Investors" shall mean, collectively, Xxxxxxx
& Xxxxxxxx Capital Partners III, L.P., a California limited
partnership, H&F Orchard Partners III, L.P., a California limited
partnership and H&F Partners III, L.P., a California limited
partnership.
(m) "HFCP Options" shall have the meaning given such
term in the Stockholders' Agreement.
(n) "Management Voting Trust" shall mean the trust
established pursuant to the management voting trust agreement
dated as of December 12, 1996 by and among the Company, the
Restricted Stock Trust, the Voting Trustees (as defined therein)
and each other party thereto.
(o) "Permitted H&F Transferee" shall mean any
transferee of Shares (as defined in the Stockholders' Agreement)
from an H&F Investor in a Transfer that either is not restricted
by, or occurs in compliance with, the transfer restrictions set
forth in Articles II and III of the Stockholders' Agreement,
which transferee becomes a party to the Stockholders' Agreement
if required thereby.
(p) "Permitted H&F 15% Transferee" shall mean any
Person who is a Permitted H&F Transferee who or which,
immediately after the transfer from the H&F Investors that
resulted in such Person becoming a Permitted H&F Transferee,
together with all Affiliates and Associates of such Person, is
the beneficial owner of 15% or more of the then outstanding
shares of Common Stock.
(q) "Person" shall mean any individual, firm, limited
liability company, corporation, partnership, trust, association
or other entity.
(r) "Preferred Shares" shall mean shares of Cumulative
Participating Junior Preferred Stock, no par value, of the
Company having the rights, preferences and limitations set forth
in the form of Certificate of Designations attached to this
Agreement as Exhibit A and, to the extent that there are not a
sufficient number of shares of Cumulative Participating Junior
Preferred Stock authorized to permit the full exercise of the
then outstanding Rights,
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any other series of preferred stock of the Company designated for
such purpose by the Board of Directors containing terms
substantially similar to the terms of the Cumulative
Participating Junior Preferred Stock.
(s) "Roll-Over Options" shall have the meaning set
forth in the Stockholders' Agreement.
(t) "Stock Acquisition Date" shall mean the time and
day of the first public announcement (which for purposes of this
definition, shall include, without limitation, the filing of a
report pursuant to the Exchange Act) by the Company or an
Acquiring Person indicating that an Acquiring Person has become
such.
(u) "Stockholders' Agreement" shall mean the amended
and restated stockholders' agreement dated as of May 8, 1998 by
and among the H&F Investors, the Management Investors and the
Management Voting Trust (as such terms are defined therein), such
additional signatories as may be deemed added from time to time
pursuant thereto, and the Company.
(v) "Stock Split" shall mean any and all dividends
declared on the outstanding shares of Common Stock payable in
shares of Common Stock, if the declaration of such dividends
occurs prior to the date on which the class of shares of Common
Stock is registered under the Exchange Act, regardless of when
such dividends are payable or paid.
(w) "Subsidiary" shall mean, with respect to any
Person, any corporation or other entity as to which such Person
beneficially owns, directly or indirectly, sufficient voting
securities or other ownership interests having ordinary voting
power sufficient, in the absence of contingencies, to elect at
least a majority of its directors (or individuals performing
similar functions).
(x) "Transfer" shall have the meaning set forth in the
Stockholders' Agreement.
(y) The terms set forth below are defined in the
Sections indicated below:
Term Section
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Act 7(c)
Board of Directors Recitals
Common Stock Equivalent 11(a)(iii)(B)
current market price 11(d)
Current Value 11(a)(iii)(A)
Distribution Date 3(a)
Equivalent Preferred Shares 11(b)
Exchange Act 1(b)
Exchange Ratio 24
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Expiration Date 7(a)
Final Expiration Date 7(a)
NASDAQ 11(d)(i)
NYSE 11(d)(i)
Principal Party 13(b)
Purchase Price 7(b)
Record Date Recitals
Redemption Date 7(a)
Redemption Price 23
Restricted Stock Trust 1(j)
Right Recitals
Right Certificates 3(a)
Rights Agent Recitals
Section 13 Event 13(a)
Security 11(d)(i)
Spread 11(a)(iii)(A)
Substitution Period 11(a)(iii)
Trading Day 11(d)(i)
Trigger Date 11(a)(iii)
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice
to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agent. In the event that the
Company appoints one or more Co-Rights Agents, the respective
duties of the Rights Agent and any Co-Rights Agents shall be as
the Company shall determine.
Section 3. Issue of Right Certificates. (a) Until the
close of business on the earlier of (i) the tenth (10th) Business
Day after the Stock Acquisition Date and (ii) the tenth (10th)
Business Day (or such later day as may be determined by action of
the Board of Directors prior to such time as any Person becomes
an Acquiring Person) after the date of the commencement by any
Person (other than any Company Entity) of, or the first public
announcement of the intent of any Person (other than any Company
Entity) to commence (which intention to commence remains in
effect for five (5) Business Days after such announcement), a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (the earlier of the
dates referred to in clauses (i) and (ii) above being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the shares of Common Stock
registered in the names of the holders of the shares of Common
Stock (which certificates for shares of Common Stock shall also
be deemed (other than for
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purposes of this Section 3 and any provision of this Agreement
referring to the issuance of Rights Certificates) to be Right
Certificates) and not by separate Right Certificates, and (y) the
Rights (and the right to receive Right Certificates) will be
transferable only simultaneously and together with the transfer
of the underlying shares of Common Stock. The Company shall give
the Rights Agent prompt written notice of the Distribution Date.
As soon as practicable after the Distribution Date, and receipt
by the Rights Agent of written notice of the Distribution Date
from the Company, subject to Section 7(e) hereof, the Company
will prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights Agent
will, if requested, send, at the expense of the Company) by
first-class, postage-prepaid mail, to each record holder of
shares of Common Stock as of the close of business on the
Distribution Date, as shown by the records of the Company, at the
address of such holder shown on such records, a right
certificate, substantially in the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as herein provided.
As of and after the close of business on the Distribution Date,
the Rights will be evidenced solely by such Right Certificates
and may be transferred only by the transfer of the Rights
Certificates as permitted hereby, separately and apart from any
transfer of one or more shares of Common Stock.
(b) With respect to certificates for shares of Common
Stock outstanding as of the Record Date or issued prior to the
Distribution Date, until the Distribution Date the Rights will be
evidenced solely by such certificates registered in the names of
the holders thereof. Until the Distribution Date (or the earlier
of the Redemption Date or the Expiration Date), the surrender for
transfer of any certificate for shares of Common Stock
outstanding as of the Record Date shall also constitute the
transfer of the Rights associated with the shares of Common Stock
represented thereby.
The Company will mail to any record holder of a Right
(including, prior to the Distribution Date, a record holder of
shares of Common Stock) a copy of this Rights Agreement, without
charge, promptly after receipt of a written request therefor.
(c) Rights shall be issued in respect of all shares of
Common Stock that become outstanding after the Record Date and
prior to the earlier of the Distribution Date and the Expiration
Date, and all certificates for shares of Common Stock which
become outstanding after the Record Date, but prior to the
earlier of the Distribution Date and the Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to
them substantially the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Young & Rubicam Inc. and The Bank of New York,
dated as of May 1, 1998, as it may from time to time be
supplemented or amended pursuant to its terms (the "Rights
Agreement"), the terms of which are hereby incorporated by
reference and a copy of which is on file at the principal
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executive offices of Young & Rubicam Inc. Under certain
circumstances as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. Young & Rubicam
Inc. will mail to the registered holder of this certificate
a copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under certain
circumstances provided for in the Rights Agreement, Rights
issued to or beneficially owned by any Person who is an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) or any
subsequent holder of such Rights shall become null and
void.
In the event that the Company purchases or acquires any shares of
Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such shares of Common Stock
shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the shares
of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit B hereto and may have such
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any 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 Sections 11 and 22 hereof,
the Right Certificates, whenever distributed, shall be dated as
of the Record Date, shall show the date of countersignature and
on their face shall entitle the holders thereof to purchase such
number of one-hundredths of a Preferred Share as shall be set
forth therein at the Purchase Price, but the number and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
Section 5. Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President or any Senior Vice President or Vice President, or its
Treasurer, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and
issued and delivered with the same force and effect as though the
person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Right
9
Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal stock transfer
office or such other office designated by it for such purpose,
books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the name(s) and
address(es) of the holder(s) of each Right Certificate, the
number of Rights evidenced on its face by each Right Certificate,
the certificate number of each Right Certificate and the date of
each Right Certificate.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. (a) Subject to the provisions of
Sections 7(e), 7(f) and 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close
of business on the Expiration Date, any Right Certificate or
Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or other Right
Certificates entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or other
securities, cash and/or assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged
at the principal stock transfer office of the Rights Agent or
such other office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate unless and
until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side thereof and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner)
or Associates and Affiliates of the foregoing as the Company
shall reasonably request. Thereupon the Rights Agent shall,
subject to Sections 7(e), 7(f) and 14 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The
Company may require payment, by the holders of the Rights, of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination
or exchange of Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f)
and 14 hereof, upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of an indemnity or security
reasonably satisfactory to the Company and the Rights Agent, 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 Right Certificate if
mutilated, the Company will make and deliver a new Right
Certificate of
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like tenor to the Rights Agent for countersignature and delivery
to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price,
Expiration Date of Rights. (a) Subject to Sections 7(e), 7(f),
9(e) and 11(a)(iii) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after
the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at its
principal office or such other office designated by it for such
purpose, together with payment of the Purchase Price for each
one-hundredth of a Preferred Share (or other securities, cash
and/or assets, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (i) the close of
business on May 1, 2008 (the "Final Expiration Date"), (ii) the
date and time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), (iii) the date and
time at which the Rights are exchanged as provided in Section 24
hereof, or (iv) the date and time at which the Rights expire
pursuant to Section 13(d) (such earliest date and time being
referred to herein as the "Expiration Date").
(b) The purchase price for each one one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right
shall initially be $87.50, shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United States of America in
accordance with paragraph (c) below (the "Purchase Price").
(c) Except as otherwise provided herein, upon receipt
of a Right 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 Preferred
Shares (or other securities, cash and/or assets, as the case may
be) to be purchased and an amount equal to any applicable
transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the
Company, the Rights Agent shall, subject to Section 20(j) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares certificates (or make available, if the
Rights Agent is the transfer agent) for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests or
(B) if the Company has elected to deposit the Preferred Shares
issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred
Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited
by the transfer agent of the Preferred Shares with the depositary
agent) and the Company hereby directs the depositary agent to
comply with such request, (ii) when appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered
holder of such
11
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, promptly
after receipt thereof, deliver any such cash to or upon the order
of the registered holder of such Right Certificate. In the event
that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to
Section 11 hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or property are
available for distribution by the Rights Agent, if and when
appropriate. Notwithstanding the foregoing provisions of this
Section 7(c), the Company may suspend the issuance of Preferred
Shares or shares of Common Stock or other securities upon
exercise of a Right for a reasonable period, not in excess of
ninety (90) calendar days, during which the Company seeks to
register under the Securities Act of 1933, as amended (the
"Act"), and any applicable securities law of any other
jurisdiction, the Preferred Shares or shares of Common Stock or
such other securities to be issued pursuant to the Rights.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of
Sections 7(e), 7(f) and 14 hereof, or the Rights Agent shall
place an appropriate notation on the Right Certificate with
respect to those Rights exercised.
(e) Notwithstanding any other provision of this
Agreement to the contrary, from and after the Stock Acquisition
Date, any Rights beneficially owned by (i) an Acquiring Person or
any Affiliate or Associate thereof, (ii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee concurrently with or after the Acquiring
Person becomes such, (iii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a
transferee prior to the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) by the Acquiring Person to holders of
equity interests in such Acquiring Person (or any Affiliate or
Associate thereof) or to any Person with whom the Acquiring
Person (or any Affiliate or Associate thereof) has any continuing
agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which
the Board of Directors has determined is part of a plan,
arrangement or understanding (whether or not in writing) which
has as a purpose or effect the avoidance of this Section 7(e) or
of Section 11 or 13 with respect to the limitation of rights
beneficially owned by an Acquiring Person (or any Associate or
Affiliate thereof), or (iv) a subsequent transferee of any of the
foregoing, shall become null and void without any further action
and no existing or subsequent holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise. No Right
Certificate shall be issued pursuant to Section 3 hereof that
represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the provisions of this Section
7(e) or any Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to
12
the provisions of this Section 7(e) or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be
void pursuant to the provisions of this Section 7(e) shall be
cancelled; provided, that if any Right Certificate that should
not have been issued, or should have been cancelled, pursuant to
this sentence is issued or is not cancelled, it shall
nevertheless be void as provided above in this Section 7(e). The
Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) hereof are complied with, but
shall have no liability to any holder of Right Certificates or
any other Person as a result of the failure to make any
determination with respect to an Acquiring Person or its
Affiliates or Associates or to transferees of the foregoing. The
Rights Agent shall use all reasonable efforts to comply with the
provisions hereof to the extent it has received instructions from
the Company concerning such matters.
(f) Notwithstanding any other provision of this
Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with
respect to a registered holder of any Right Certificate upon the
occurrence of any purported transfer or exercise as set forth in
this Section 7 unless and until the registered holder shall have
completed and signed the certificate contained in the form of
election to purchase shares set forth on the reverse side thereof
and shall have provided such additional evidence of the identity
of the Beneficial Owner and former Beneficial Owner (and
Associates and Affiliates of the foregoing) as the Company shall
reasonably request.
Section 8. Cancellation of Right Certificates. All
Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificate shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the
Company.
Section 9. Reservation and Availability of Capital
Stock. (a) The Company covenants and agrees that at all times
prior to the Stock Acquisition Date, it will cause to be reserved
and kept available out of its authorized and unissued Preferred
Shares or any authorized and issued Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights and,
after the Stock Acquisition Date, shall to the extent reasonably
practicable, so reserve and keep available a sufficient number of
its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury which may be
required to permit the exercise in full of the Rights pursuant to
this Agreement.
13
(b) The Company covenants and agrees that it will take
all such action as may be necessary to insure that all Preferred
Shares (and following the Stock Acquisition Date, shares of
Common Stock and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and
nonassessable shares.
(c) The Company covenants and agrees that it will pay
when due and payable any and all U.S. federal and state transfer
taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Preferred Shares
(or shares of Common Stock and/or other securities, as the case
may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer involved in the transfer or delivery
of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for Preferred
Shares (or shares of Common Stock and/or other securities, as the
case may be) in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates or depositary
receipts for Preferred Shares (or shares of Common Stock and/or
other securities, as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(d) So long as the Preferred Shares (or shares of
Common Stock and/or other securities, as the case may be)
issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such
exercise.
(e) The Company shall use its best efforts to (i) file
as soon as practicable following the Stock Acquisition Date (or,
if required by law, at such earlier time following the
Distribution Date as so required) a registration statement under
the Act with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable
after such filing and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act and the rules and regulations thereunder)
until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the expiration of
the Rights. The Company will also take such action as may be
appropriate to ensure compliance with the securities or "blue
sky" laws of the various states. The Company may temporarily
suspend, in accordance with applicable law, for a period of time
not to exceed ninety (90) calendar days after the date set forth
in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public
announcement, and shall promptly send written notice to the
14
Rights Agent, stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been
declared effective. The Rights Agent may assume that any Right
exercised is permitted to be exercised under applicable law and
shall have no liability for acting in reliance upon such
assumption.
Section 10. Preferred Share Record Date. Each Person
in whose name any certificate or depositary receipt for Preferred
Shares (or shares of Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the
Preferred Shares (or shares of Common Stock and/or other
securities, as the case may be) represented thereby on, and such
certificate or depositary receipt shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the transfer
books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such
certificate or depositary receipt shall be dated, the next
succeeding Business Day on which the transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled
to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number and
kind of securities, or fractions thereof, 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 shall at any time
after the date of this Agreement (A) declare or pay a dividend on
the Preferred Shares payable in Preferred Shares, (B) subdivide
or split the outstanding Preferred Shares, (C) combine or
consolidate the outstanding Preferred Shares into a smaller
number of Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), 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, split, combination, consolidation or
reclassification, and the number and kind of shares of Preferred
Shares or capital stock, as the case may be, issuable upon
exercise of a Right on such date, shall be proportionately
15
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of shares of
Preferred Shares or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date and
at a time when the 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, split,
combination, consolidation or reclassification; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of
the shares of Preferred Shares or capital stock, as the case may
be, issuable upon exercise of one Right. If an event occurs which
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) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Immediately upon the Stock Acquisition Date,
proper provision shall be made so that each holder of a Right
(except as otherwise provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of
this Agreement and subject to Sections 9(e), 11(a)(iii) and 24,
in lieu of Preferred Shares, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one one-hundredths of a Preferred Share for which a Right was or
would have been exercisable immediately prior to the Stock
Acquisition Date (whether or not such Right was then exercisable)
and (y) dividing that product by fifty percent (50%) of the
current market price per share of the Common Stock (determined
pursuant to Section 11(d) hereof) on the Stock Acquisition Date
(such number of shares being hereinafter referred to as the
"Adjustment Shares"); provided, however, if the transaction that
would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with
the foregoing clause (ii) of this Section 11(a), and the Rights
become so exercisable, the Company (acting by resolution of the
Board of Directors) shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the then current Purchase
Price attributable to each Right (such excess being
referred to herein as the "Spread"), and
(B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon
payment of the Purchase Price, (1)
16
shares of Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of
shares, of preferred stock which the Board of Directors has
deemed to have substantially the same value as shares of
Common Stock (such shares of preferred stock being referred
to herein as "Common Stock Equivalents")), (2) a reduction
in the Purchase Price, (3) cash, (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing (provided, that in making any such provision,
Rights shall, to the fullest extent feasible in view of the
number of authorized shares of Common Stock not outstanding
or reserved for issuance for purposes other than upon
exercise of the rights, be exercisable for shares of Common
Stock), in each case having an aggregate value equal to the
Current Value, where such aggregate value has been
determined by the Board of Directors based upon the advice
of a nationally recognized investment banking firm selected
by the Board of Directors;
provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the Stock Acquisition
Date (the "Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash,
securities and/or assets that have an aggregate value equal to
the Spread. Notwithstanding the immediately preceding sentence,
if the Board of Directors shall determine 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 thirty (30) calendar day period set forth above may be
extended to the extent necessary, but not to more than ninety
(90) calendar days after the Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, being
referred to herein as the "Substitution Period"). To the extent
that the Company determines that some action need be taken
pursuant to the foregoing provisions of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e), that such
action shall apply uniformly to all outstanding Rights and (y)
may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of this
Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, in each case
with prompt notice to the Rights Agent. For purposes of this
Section 11(a)(iii), the terms of any Common Stock Equivalent
shall be determined so that the per share or per unit value of
such Common Stock Equivalent shall have the same value as the
"current market price" per share of Common Stock (as determined
pursuant to Section 11(d) hereof on the date of the first
occurrence of the Stock Acquisition Date).
17
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within
forty-five (45) calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having
substantially the same rights, privileges, and preferences as the
Preferred Shares ("Equivalent Preferred Shares")) or securities
convertible into Preferred Shares or Equivalent Preferred Shares
at a price per Preferred Share or Equivalent Preferred Share (or
having a conversion price per share, if a security convertible
into Preferred Shares or Equivalent Preferred Shares) less than
the current market price per Preferred Share (as determined
pursuant to Section 11(d) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, of which the
numerator shall be the number of Preferred Shares and Equivalent
Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or Equivalent Preferred
Shares to be so offered (and/or the aggregate initial conversion
price of the convertible securities to be so offered) would
purchase at such current market price and of which the
denominator shall be the number of Preferred Shares and
Equivalent Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or Equivalent
Preferred Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be
paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the
Rights Agent. Preferred Shares owned by or held for the account
of the Company or any of its Subsidiaries shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend at a rate per
Preferred Share not in excess of the greater of (x) two hundred
(200) times the rate of the last quarterly cash dividend per
share of Common Stock theretofore paid and (y) $5.00 per quarter,
or a dividend payable in Preferred Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price per
Preferred Share (as determined pursuant to Section 11(d) hereof)
on such record date, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
18
distributed or of such subscription rights or warrants applicable
to one Preferred Share and of which the denominator shall be such
current market price per Preferred Share. Such adjustments shall
be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
and subject to Section 11(d)(ii), the "current market price" for
any security (a "Security" for purposes of this Section 11(d)(i))
on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current market
price per share of the Security is determined during a period
following the announcement by the issuer of such Security of a
dividend or distribution on such Security payable in such
Security or securities convertible into or exercisable or
exchangeable for such Security, or any subdivision, split,
combination, consolidation or reclassification of such Security,
and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution or the record
date for such subdivision, split, combination, consolidation or
reclassification, then, and in each such case, the current market
price shall be appropriately adjusted to reflect ex-dividend or
ex-distribution trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange, Inc. ("NYSE") or, if the Security is not listed or
admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or any
successor ("NASDAQ") or such other system then in use, or, if on
any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors. If on such date no
such market maker is making a market in the Security, the fair
value of such shares on such date as determined in good faith by
the Board of Directors shall be used, such determination to be
described in a statement filed with the Rights Agent. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted
to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange but is quoted on NASDAQ, a day on which
NASDAQ is in operation or if the Security is neither listed nor
admitted to trading on any national securities exchange nor
quoted on NASDAQ, a Business Day.
19
(ii) For the purpose of any computation hereunder, the
"current market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section
11(d)(i), except that if the Preferred Shares are not publicly
traded, the "current market price" of the Preferred Shares shall
be conclusively deemed to be the current per share market price
of the Common Stock as determined pursuant to Section 11(d)(i),
multiplied by one hundred (as such number may be appropriately
adjusted for stock splits, stock dividends, recapitalizations and
similar events after the date of this Agreement). If neither the
shares of Common Stock nor the Preferred Shares are publicly held
or so listed or traded, the "current per share market price"
shall mean the fair value per share as determined in good faith
by an independent investment banking firm selected in good faith
by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Notwithstanding any other provision of this
Agreement to the contrary, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in such price;
provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock
or other security or to the nearest one one-millionth of a
Preferred Share. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the
date of the transaction which mandates such adjustment and (ii)
the date of the expiration of the right to exercise any Rights.
(f) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a) or Section 13(a), the
holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, thereafter
the number or amount of such other securities so receivable upon
exercise of any Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the securities contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 7, 9, 10, 13 and 14 of this
Agreement with respect to the Preferred Shares shall apply on
like terms to any such other securities.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) of this Agreement, upon
each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c) of this Agreement,
each Right outstanding
20
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a Preferred Share covered by a Right
immediately prior to such adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which it was
exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least ten (10) calendar days later than the date of
the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date, Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of one
one-hundredths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
21
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one-hundredth of the
then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Notwithstanding any provision of this Section 11
to the contrary, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and
to the extent that the Board of Directors shall, in its sole
discretion determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the
current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exercisable or exchangeable for Preferred Shares, (iv) stock
dividends or (v) issuance of rights, options or warrants referred
to hereinabove in this Section 11, hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a wholly-owned Subsidiary of
the Company in a transaction which does not violate Section 11(o)
hereof), (ii) merge with or into any other Person (other than a
wholly-owned Subsidiary of the Company in a transaction which
does not violate Section 11(o) hereof), 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 fifty percent (50%) of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or
by-law provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect or other actions
taken, which would materially 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
22
who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior
thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(n).
(o) The Company covenants and agrees that, after a
Stock Acquisition Date it will not, except as permitted by
Section 24 or Section 27 hereof, take (or permit any
Subsidiary to take) any action the purpose of which is to, or if
at the time such action is taken it is reasonably foreseeable
that the effect of such action is to, materially diminish or
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding any other provision of this
Agreement to the contrary, in the event that the Company shall,
at any time after the date of this Agreement and prior to the
Distribution Date, (i) declare or pay any dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock (other than the Stock Split), (ii) subdivide the
outstanding shares of Common Stock, (iii) combine or consolidate
the outstanding shares of Common Stock into a smaller number of
shares, or (iv) effect a reclassification of its outstanding
shares of Common Stock, the number of one one-hundredths of a
Preferred Share so purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock
outstanding immediately prior to such event and the denominator
of which shall be the total number of shares of Common Stock
outstanding immediately following such event. The adjustments
provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in
this Section 11(p) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
Section 12. Certification of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as provided
in Sections 11 or 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent
for the Preferred Shares or the shares of Common Stock a copy of
such certificate. The Rights Agent shall be fully protected in
relying on such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. (a) In the event (a "Section 13
Event") that, following the Stock Acquisition Date,
23
directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any Person or Persons, (y) any Person or
Persons shall consolidate with, or merge with and into, the
Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in the
case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities
generally entitled to vote in the election of directors ("voting
securities") of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into securities of the surviving entity) all of
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and
holders of such securities not having changed as a result of such
merger or consolidation), or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or a series of related
transactions, assets or earning power aggregating more than fifty
percent (50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole and calculated on the basis of
the Company's most recent regularly prepared financial
statements) to any Person or Persons (other than the Company or
any Subsidiary of the Company in one or more transactions each of
which does not violate Section 11(o) hereof), then, and in each
such case (except as provided in Section 13(d) hereof), proper
provision shall be made so that (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement and in lieu of the Preferred Shares, shares of Common
Stock and other securities or assets of the Company, such number
of validly authorized and issued, fully paid, non-assessable and
freely tradable shares of Common Stock of the Principal Party,
not subject to any liens, encumbrances, rights of first refusal,
preemptive rights or other adverse claims, as shall be equal to
the result obtained by (A) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to the first
occurrence of a Section 13 Event (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)) and (y)
dividing that product by fifty percent (50%) of the current
market price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date
of consummation of such Section 13 Event; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; and (iv) such Principal
Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9 hereof (applying the provisions
thereof with respect to Preferred Shares of the Company to the
shares of Common Stock of such Principal Party)) in connection
with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be possible, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the
Rights.
24
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a):
(A) the Person that is the issuer of any securities into
which Common Stock of the Company is converted in such
merger or consolidation, or, if there is more than one such
issuer, the issuer of whose Common Stock has the greatest
aggregate market value or (B) if no securities are so
issued, the Person that is the other party to such merger
or consolidation, or, if there is more than one such
Person, the Person whose Common Stock has the greatest
aggregate market value (including, if applicable, the
Company if it is the surviving corporation); and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the
greatest portion of the assets or earning power cannot be
determined, whichever of such Persons whose Common Stock
has the greatest aggregate market value;
provided, however, that in any of the cases described in Section
13(b)(i) or (b)(ii) above, (1) if the shares of Common Stock of
such Person are not at such time and have not been continuously
over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the shares of Common Stock
of which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the
shares of Common Stock of two or more of which are and have been
so registered, "Principal Party" shall refer to whichever of such
Persons whose Common Stock has the greatest aggregate market
value; and (3) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as
if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person
bear to the total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized shares of
Common Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and that all rights
of first refusal or preemptive rights in respect of the issuance
of shares of Common Stock of the Principal Party upon exercise of
the outstanding Rights have
25
been waived and that such transaction shall not result in a
default by the Principal Party under this Agreement, and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon the exercise of the Rights on an appropriate
form, and use its best efforts to cause such registration
statement to become effective as soon as practicable after such
filing and to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration
Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be
necessary or appropriate;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 under
the Exchange Act; and
(iv) use its best efforts to list (or continue
the listing of) the Rights and the securities purchasable upon
exercise of the Rights on a national securities exchange or to
meet the eligibility requirements for quotation on NASDAQ.
The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at
any time after the occurrence of a Stock Acquisition Date, the
Rights which have not theretofore been exercised pursuant to
Section 11(a)(ii) shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding any other provision of this
Agreement to the contrary, Section 13 shall not be applicable to
a transaction described in subparagraphs (x) and (y) of Section
13(a) if: (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to an
Approved Offer (or an Affiliate of any such Person or Persons) as
promptly as reasonably practical (and in any event within one
year) following consummation of such Approved Offer; (ii) the
price per share of Common Stock offered in such transaction is
not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to
such Approved Offer; and (iii) the form of consideration offered
in such transaction is the same as the form of consideration paid
pursuant to such Approved Offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
(e) In case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has provision in
any of its authorized securities or in its Certificate of
Incorporation or By-Laws or other instrument governing its
corporate affairs, which
26
provision would have the effect of (i) causing such Principal
Party to issue, in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13,
shares of Common Stock of such Principal Party at less than the
then current market price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable or exchangeable
for, or convertible into, Common Stock of such Principal Party at
less than such then current market price (other than to holders
of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the
issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13, then, in such event, the Company
shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have
been cancelled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.
(f) In no event shall the Rights Agent have any
liability in respect of any such Principal Party transaction,
including without limitation, the propriety thereof. The Rights
Agent may rely and be fully protected in relying upon a
certificate of the Company stating that the provisions of this
Section 13 have been fulfilled. Notwithstanding anything in this
Agreement to the contrary, the prior written consent of the
Rights Agent must be obtained in connection with any supplemental
agreement which alters the rights or duties of the Rights Agent.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights (except, prior to the Distribution Date, as provided in
Section 11 hereof) or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the NYSE or, if the Rights are not listed or admitted
to trading on the NYSE, 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
27
market maker making a market in the Rights, as selected by the
Board of Directors. If on any such date the Rights are not quoted
by any such organization and no professional market maker is
making such a market in the Rights, the fair value of the Rights
on such date as determined in good faith by the Board of
Directors shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred
Shared). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this
Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of the Stock Acquisition
Date or a Section 13 Event, the Company shall not be required to
issue fractions of shares of its Common Stock upon exercise of
the Rights or to distribute certificates which evidence
fractional shares of its Common Stock. In lieu of fractional
shares of its Common Stock, the Company may pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of its Common
Stock. For purposes of this Section 14(c), the current market
value of one share of Common Stock of the Company shall be the
closing price of one share of Common Stock of the Company (as
determined pursuant to 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise.
(d) The holder of a Right by the acceptance thereof
expressly waives any right to receive any fractional Rights or
any fractional shares upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
respect of this Agreement, other than the rights of action vested
in the Rights Agent pursuant to Section 18, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
shares of Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the shares of
Common
28
Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, any holder of the shares of Common Stock), may, on his or
her own behalf and for his or her own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his or her
right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only simultaneously and together with the transfer
of shares of Common Stock;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or such other
office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6, Section 7(f) and Section
11(a) hereof, the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be required to be affected by any notice
to the contrary; and
(d) notwithstanding any other provision of this
Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree 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, that the
Company must use its best efforts to have any such injunction,
order, decree or ruling lifted, dissolved or otherwise overturned
as soon as possible.
29
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares or any other securities of
the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon
the holder of any Right Certificate as such, any of the rights of
a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent such compensation as shall be
agreed in writing between the Company and the Rights Agent for
all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any and all
loss, liability, damage, claim or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, opinion, statement, or other paper or document
believed by it to be genuine and to be signed and executed by the
proper person or persons and, where necessary, to be verified or
acknowledged.
The provisions of this Section 18 shall survive the
expiration of the Rights and the termination of this Agreement.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to all or
substantially all the corporate trust or stock transfer business
of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any
30
further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificate so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificate either in the
name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right
Certificate shall have the full force provided in the Right
Certificate and in this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes only those duties and obligations imposed by this
Agreement upon the following terms and conditions, and no implied
duties or obligations shall be read into this Agreement against
the Rights Agent, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of
its own selection (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person or any Affiliate or
Associate thereof and the determination of the current market
price per share of any Security) be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or omitted
by it in good faith under the provisions of this Agreement in
reliance upon such certificate.
31
(c) The Rights Agent shall be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof), or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including Rights
becoming null and void pursuant to Section 7(e) hereof); nor
shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after the Rights Agent's actual
receipt of a certificate described in Section 12 hereof); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Preferred Shares or shares of Common Stock or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares or shares of
Common Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable; and nor
shall it be responsible for the legality of the terms hereof in
its capacity as an administrative agent.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for such instructions. Any application by the Rights
Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission
of, the Rights
32
Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five (5) Business Days after
the date any officer of the Company actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity, except it may not act
for an Acquiring Person in an investment banking capacity, or
otherwise assist an Acquiring Person in ways hostile to the
Company, without the written consent of the Company.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from
any such act, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection thereof.
(j) 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 any item
therein, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first
consulting with the Company.
(k) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) In addition to the foregoing, the Rights Agent
shall be protected and shall incur no liability for, or in
respect of, any action taken or omitted by it in connection with
its administration of this Agreement if such acts or omissions
are in reliance upon (i) the proper execution of the certificates
concerning beneficial ownership appended to the form of
assignment and the form of election to purchase attached hereto
unless the Rights Agent shall have actual knowledge that, as
executed, any such certificate is untrue, or (ii) the non-
33
execution of any such certificate including, without limitation,
any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt
written notice of any event or ownership which would prohibit the
exercise or transfer of the Right Certificates.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the
Common Stock by registered or certified mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty
(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 and Preferred Shares by registered or
certified mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of sixty (60) days
after giving notice of such removal or after it has been notified
in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his or her Right
Certificate for inspection by the Company), then the Rights Agent
or the registered holder of any Right Certificate may apply at
the expense of the Company to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall
be a corporation, bank or trust company organized and doing
business under the laws of the United States or of the State of
New York (or any other state of the United States so long as such
corporation is authorized to do business as a banking institution
in the State of New York) in good standing, having an office in
the State of New York, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject
to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and Preferred Shares,
and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights
Agent, as the case may be. Notwithstanding the foregoing
provision, in the event of resignation, removal or incapacity
34
of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have
assumed the duties of the Rights Agent hereunder.
Section 22. Issuance of New Right Certificate.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by the Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of
this Agreement.
In addition, in connection with the issuance or sale
of shares of Common Stock following the Distribution Date (other
than upon exercise or exchange of a Right) and
prior to the Expiration Date, the Company, subject to Section
7(e) hereof, (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued
by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors, issue Right
Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that
(i) the Company shall not be obligated to issue any Right
Certificate if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption. (a) The Company may, by
resolution of the Board of Directors, at its option, at any time
prior to the earlier of (x) the Stock Acquisition Date and (y)
the close of business on the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the current
market price of the Common Stock determined pursuant to Section
11(d)(i) hereof) or any other form of consideration deemed
appropriate by the Board of Directors.
(b) Immediately upon adoption of an effective
resolution of the Board of Directors ordering the redemption of
the Rights in compliance with Section 23(a) (or upon the
subsequent satisfaction of all conditions to such redemption
established by such resolution), evidence of which shall have
been filed with the Rights Agent, and without any further action
and without any notice, the right to exercise the Rights will
terminate and the
35
only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within ten (10) Business Days after
the action of the Board of Directors ordering the redemption of
the Rights (or such subsequent satisfaction of all such
conditions), the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the shares of Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase any Rights at any time
in any manner other than that specifically set forth in this
Section 23 or in Section 24 hereof, and other than in connection
with the repurchase of shares of Common Stock of the Company
prior to the Distribution Date.
(c) In the event that the Board of Directors adopts an
effective resolution ordering the redemption of the Rights in
compliance with Section 23(a), the Company may, at its option,
discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption
of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent of the Common Stock, and
upon such action, all outstanding Rights and Right Certificates
shall be null and void without any further action by the Company.
Section 24. Exchange. (a) The Board of Directors may,
at its option, at any time after the Stock Acquisition Date
exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for shares of
Common Stock (or Common Stock Equivalents) at an exchange ratio
of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than any
Company Entity), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty percent (50%)
or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of
Directors ordering the exchange of Rights pursuant to and in
compliance with 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, which excludes Rights that have become void
pursuant to the provisions of Section 7(e) hereof, shall be to
receive that number of shares of Common Stock, or Common Stock
Equivalents, equal to the number of
36
such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly file notice of such Board action with
the Rights Agent and give public notice of any such exchange;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of
the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e)) held by
each holder of Rights.
(c) In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required, pursuant to
this Section 24, to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of the Right
Certificates, with regard to which such fractional shares of
Common Stock would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this paragraph (d), the
current market value of a whole share of Common Stock shall be
the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of exchange
pursuant to this Section 24, and the value of any Common Stock
Equivalent shall be deemed to have the same current market value
as the Common Stock on such date.
Section 25. Notice of Certain Events. (a) In case the
Company shall propose (a) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares (or, after the
Distribution Date, holders of the shares of Common Stock) or to
make any other distribution to the holders of its Preferred
Shares (or, after the Distribution Date, holders of the shares of
Common Stock), other than a regular quarterly cash dividend at a
rate per Preferred Share not in excess of the greater of (x) two
hundred (200) times the rate of the last quarterly cash dividend
per share of Common Stock theretofore paid and (y) $5.00 per
quarter or (b) to offer to the holders of its Preferred Shares
(or, after the Distribution Date, holders of the shares of Common
Stock) rights, options or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, or (c) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred
37
Shares), or (d) after the Distribution Date, to effect any
merger, consolidation or other combination with or into any
Person (other than a Subsidiary of the Company in a transaction
which does not violate Section 11(o) hereof), or to effect any
sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than fifty percent (50%) of the assets
or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which
does not violate Section 11(o) hereof), or (e) after the
Distribution Date, to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section
26 hereof, a notice of such proposed action to the extent
feasible and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or Rights, 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
shares of Common Stock and/or Preferred Shares, if any such date
is to be fixed, and such notice shall be so given in the case of
any action covered by clause (a) or (b) above at least ten (10)
days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of shares of Common Stock
and/or Preferred Shares, whichever shall be earlier. The failure
to give notice required by this Section 24 or any defect therein
shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) Upon the Stock Acquisition Date (i) the Company
shall as soon as practicable thereafter give to the Rights Agent
and each holder of a Right Certificate, to the extent feasible
and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under
Sections 7(e) and 11(a) hereof and (ii) all references in Section
25(a) hereof to Preferred Shares shall be deemed thereafter to
refer also to shares of Common Stock or other securities issuable
in respect of the Rights.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Young & Rubicam Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
38
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 Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Right Certificate (or, if prior to the Distribution Date, to
the holder of any certificate for shares of Common Stock) shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Stock Acquisition Date, the Company and the Rights Agent shall,
if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates or
certificates representing shares of Common Stock. From and after
the Stock Acquisition Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right
Certificates or certificates representing shares of Common Stock
in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate thereof); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed or to modify the ability (or inability) of
the Board of Directors to redeem the Rights, in either case at
such time as the Rights are not then redeemable or (B) any other
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of and/or the
benefits to the holders of Rights (other than an Acquiring Person
or an Affiliate or Associate of any such Person). Upon the
delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment provided that such
supplement or amendment does not adversely affect the rights or
obligations of the Rights Agent under Section 18 or Section 20
hereof. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of shares of Common Stock.
39
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of
the shares of Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, of the shares of Common
Stock of the Company).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement or the Rights is held
by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of this Agreement
and the Rights shall remain in full force and effect and shall in
no way be affected, impaired or invalidated; provided, however,
that notwithstanding any other provision of 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 determines in its good
faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of
business on the tenth (10th) Business Day following the date of
such determination by the Board of Directors.
Section 31. Determination and Actions by the Board of
Directors, etc. The Board of Directors shall have the exclusive
power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board of
Directors or to the Company, or as may be necessary or advisable
in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions
of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not
to redeem the Rights pursuant to Section 23 hereof or to sup
plement or amend the Agreement and whether any proposed
supplement or amendment adversely affects the interests of the
holders of Right Certificates and comports with the requirements
of Section 27 hereof, or to approve any tender offer or exchange
offer for purposes of the definition of "Approved Offer," or to
determine whether any acquisition of beneficial ownership of
shares of Common Stock is inadvertent within the meaning of the
definition of "Acquiring Person," or to find or to announce
publicly that any Person has become an Acquiring Person). All
such actions, calculations, interpretations and determinations
(including for purpose of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of
Directors in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the
Right
40
Certificates and all other parties, and (y) not subject the Board
of Directors or any director to any liability to the holders of
the Right Certificates.
Section 32. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State, provided, however, that the
rights and obligations of the Rights Agent shall be governed by
and construed in accordance with the laws of the State of New
York.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, all as of the date and the year first above
written.
Young & Rubicam Inc.
By /s/ Xxxxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President,
General Counsel
The Bank of New York, as Rights Agent
By /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Asst. Vice President
42
EXHIBIT A
---------
FORM
of
CERTIFICATE OF DESIGNATIONS
of
CUMULATIVE PARTICIPATING JUNIOR PREFERRED STOCK
of
YOUNG & RUBICAM INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
--------------------
Young & Rubicam Inc., a corporation organized and
existing under the Delaware General Corporation Law (hereinafter
called the "Corporation"), hereby certifies that the following
resolution was duly adopted by the Board of Directors of the
Corporation as required by Section 151 of the Delaware General
Corporation Law on April 16, 1998:
RESOLVED, that pursuant to the authority vested in the
Board of Directors of this Corporation (hereinafter called the
"Board of Directors" or the "Board") in accordance with the
provisions of the Amended and Restated Certificate of
Incorporation of the Corporation, the Board of Directors hereby
creates a series of Preference Stock, par value of $0.01 per
share, of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and
limitations thereof as follows:
Cumulative Participating Junior Preferred Stock
Section 1. Designation and Amount. The shares of such
series shall be designated as "Cumulative Participating Junior
Preferred Stock" (the "Junior Preferred Stock") and the number of
shares initially constituting the Junior Preferred Stock shall be
2,500,000. Such number of shares may be increased or decreased by
resolution of the Board
of Directors; provided, that no such decrease shall reduce the
number of authorized shares of Junior Preferred Stock to a number
less than the number of shares of Junior Preferred Stock then
outstanding plus the number of shares of Junior Preferred Stock
then reserved for issuance upon the exercise of any outstanding
options, rights or warrants or upon the exercise of any
conversion or exchange privilege contained in any outstanding
securities issued by the Corporation. The Corporation's stated
capital with respect to each issued and outstanding share of
Junior Preferred Stock shall be $1.00.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares
of any series of Preference stock ranking senior to the Junior
Preferred stock with respect to dividends, including the
Corporation's Money Market Preferred Stock, the holders of shares
of Junior Preferred Stock, in preference to the holders of shares
of Common Stock, par value $0.01 per share (the "Common Stock"),
of the Corporation, and in preference to the holders of shares of
any other class of capital stock of the Corporation ranking
junior to the Junior Preferred Stock with respect to dividends,
shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first days of
January, April, July and October in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Junior
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, one hundred (100)
times the aggregate per share amount of all cash dividends, and
one hundred (100) times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in
shares of Common Stock (other than any and all dividends declared
on the outstanding Shares of Common Stock payable in Common
Stock, if the declaration of such dividends occurs prior to the
date on which the Common Stock is registered under the Exchange
Act, regardless of when such dividends are payable or are paid (a
"Stock Split")), or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise), then in each such case the amount
to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is
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the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare, out of funds
legally available therefor, a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Junior Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Junior Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares of Junior
Preferred Stock is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock
entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not
more than fifty (50) calendar days prior to the date fixed for
the payment thereof.
Section 3. Voting Rights. In addition to any other
voting rights required by applicable law, the holders of shares
of Junior Preferred Stock shall have the following voting rights:
(A) Each share of Junior Preferred Stock shall entitle
the holder thereof to one hundred (100) votes (subject to
adjustment as set forth below) on all matters submitted to a vote
of the stockholders of the Corporation (including, without
limitation, the election of directors). In the event the
Corporation shall at any time declare any dividend on the Common
Stock payable in shares of Common Stock (other than the Stock
Split), or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise), then in each such case the number of votes per share
to which holders of shares of Junior Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is
the
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number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the
Amended and Restated Certificate of Incorporation, in any other
Certificate of Designations creating a series of Preference Stock
or any similar stock or by law, the holders of shares of Junior
Preferred Stock, the holders of shares of Common Stock and the
holders of any other capital stock of the Corporation having
general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Junior
Preferred Stock in an amount equal to the full accrued dividends
for six (6) or more quarterly dividend periods, whether or not
consecutive, shall not have been paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust
for the holders of all of such shares, the Board of Directors of
the Corporation shall promptly take all necessary actions to
increase the authorized number of directors of the Corporation by
one (1) and the holders of the shares of the Junior Preferred
Stock then outstanding shall be entitled (by series, voting as a
single class) to elect one (1) person as a director to the Board
of Directors of the Corporation (such right to elect one (1)
director being hereinafter sometimes referred to as the "special
voting rights"), each outstanding share having such right being
entitled for such purpose to one vote; provided, however, that at
such time as the arrearage in payment of dividends which gave
rise to the exercise of the special voting rights has been cured
with regard to the Junior Preferred Stock by waiver or payment of
all accrued dividends, the right of the holders of such shares so
to vote as provided in this paragraph (C)(i) of this Section 3
shall cease (subject to renewal from time to time upon the same
terms and conditions) and the term of office of the person who is
at that time a director elected by such holders shall terminate
and the number of directors of the Corporation shall be
automatically reduced by one (1).
(ii) At any time after the special voting rights shall
have become vested in the holders of the shares of the Junior
Preferred Stock as provided in paragraph (C)(i) of this Section
3, the Secretary of the Corporation, as promptly as possible but
in any event within twenty (20) calendar days after receipt of
the written request of the holders of not less than ten percent
(10%) of the shares of the Junior Preferred Stock then
outstanding, addressed to the Corporation at its principal
office, shall call a special meeting of the holders of the shares
of the Junior Preferred Stock for the purpose of electing such
additional director, such meeting to be held at any place as
provided by the By-Laws of the Corporation for meetings of the
Corporation's stockholders, and upon not less than ten (10) nor
more than sixty (60) calendar days' notice. If such meeting shall
not be so called within sixty (60) calendar days after receipt of
the request by the Secretary of the Corporation, then the holders
of not less than ten percent (10%) of the shares of the Junior
Preferred Stock then outstanding may, by
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written notice to the Secretary of the Corporation, designate any
person to call such meeting, and the person so designated may
call such meeting, at any such place as provided above and upon
not less than ten (10) nor more than sixty (60) calendar days'
notice and for that purpose shall have access to the stockholder
record books of the Corporation. No such special meeting of the
holders of the shares of the Junior Preferred Stock and no
adjournment thereof shall be held on a date later than thirty
(30) calendar days before the annual meeting of stockholders of
the Corporation. At any meeting so called or at any annual
meeting held at any time when the special voting rights are in
effect, the holders of a majority of the shares of the Junior
Preferred Stock then outstanding, present in person or by proxy,
shall be sufficient to constitute a quorum for the election of
such additional director, and such additional director, together
with any and all other directors who are then members of the
Board of Directors, shall constitute the duly elected directors
of the Corporation.
(iii) With respect to a vacancy arising in the
directorship referred to in paragraph (C)(i) of this Section 3 at
any time when the special voting rights are in effect pursuant to
paragraph (C)(i) of this Section 3, upon the written request of
the holders of not less than ten percent (10%) of the shares of
the Junior Preferred Stock then outstanding, addressed to the
Corporation at its principal office, the Secretary of the
Corporation shall give notice of a special meeting of holders of
the shares of the Junior Preferred Stock of the election of a
director to fill such vacancy caused by the death, resignation or
other inability to serve as a director elected by such holders,
to be held not less than ten (10) nor more than twenty (20)
calendar days following receipt by the Secretary of the
Corporation of such written request. So long as special voting
rights are in effect pursuant to paragraph (c)(i) of this Section
3, any director who shall have been so elected by the holders of
the Junior Preferred Stock may be removed at any time, either
with or without cause, only by the affirmative vote of the
holders of the shares at the time entitled to cast a majority of
the votes entitled to be cast for the election of such director
at a special meeting of such holders called for that purpose, and
any vacancy thereby created may be filled by the vote of such
holders.
(D) Except as set forth herein, or as otherwise
provided by the Amended and Restated Certificate of Incorporation
or by law, holders of Junior Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate
action.
(E) Holders of Junior Preferred Stock shall be
entitled to such notice of each meeting of stockholders as is
furnished to the holders of Common Stock with respect to such
meeting.
Section 4. Certain Restrictions.
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(A) Subject to the provisions of the Amended and
Restated Certificate of Incorporation, whenever quarterly
dividends or other dividends or distributions payable on the
Junior Preferred Stock as provided in Section 2 are in arrears as
of any Quarterly Dividend Payment Date, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Junior Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Junior Preferred Stock, except dividends paid ratably on
the Junior Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Junior Preferred Stock or
redeem any shares of such parity stock, except in accordance with
the terms of the Amended and Restated Certificate of
Incorporation and with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Junior
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after such purchase or acquisition. All such
shares shall upon
A-6
their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of
Preference Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein, in the Amended and
Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preference Stock
or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A)
Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock unless, prior thereto, the holders of
shares of Junior Preferred Stock shall have received $1.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of
such payment (the "Junior Preferred Liquidation Preference").
Following the payment of the full amount of the Junior Preferred
Liquidation Preference, no additional distributions shall be made
to the holders of shares of Junior Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Junior Preferred
Liquidation Preference by (ii) 100 (as appropriately adjusted as
set forth in subparagraph (C) below to reflect such events as
stock splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii) immediately
above being referred to as the "Adjustment Number"). Following
the payment of the full amount of the Junior Preferred
Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Junior Preferred Stock and Common
Stock, respectively, holders of Junior Preferred Stock and
holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to one (1) with respect to
such Junior Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Junior Preferred Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which
rank on a parity with the Junior Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time (i)
declare any dividend on Common Stock payable in shares of Common
Stock (other than the Stock Split), (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock
A-7
into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
each share of Junior Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject
to the provision for adjustment hereinafter set forth, equal to
one hundred (100) times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall
at any time declare any dividend on the Common Stock payable in
shares of Common Stock (other than the Stock Split), or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Junior Preferred
Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. Ranking. The Junior Preferred Stock shall
rank senior, as to dividends and upon liquidation, dissolution or
winding up, to the Common Stock, and junior, as to dividends and
upon liquidation, dissolution or winding up, to all other classes
and series of capital stock of the Corporation, including all
series of Preference Stock of the Corporation, unless the terms
of any such class or series shall expressly provide otherwise.
Section 9. No Redemption. The shares of Junior
Preferred Stock shall not be redeemable.
Section 10. Fractional Shares. The Junior Preferred
Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of shares of Junior Preferred Stock.
A-8
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Executive Vice
President and General Counsel as of the 15th day of May, 1998.
-----------------------------
Executive Vice President and
General Counsel
A-9
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- Rights
-----------
NOT EXERCISABLE AFTER MAY 1, 2008 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN BY THE COMPANY OR IF EXCHANGED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT AND
TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY
ASSOCIATES OR AFFILIATES THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
YOUNG & RUBICAM 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
1, 1998 (the "Rights Agreement") between Young & Rubicam Inc., a
Delaware corporation (the "Company"), and The Bank of New York
(the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date and prior to 5:00 P.M. (New York City
time) on the Expiration Date (as such terms are defined in the
Rights Agreement) at the principal stock transfer office or such
other office of the Rights Agent designated for such purpose, or
of its successors as Rights Agent, one one-hundredth of a
fully-paid, nonassessable share of Cumulative Participating
Junior Preferred Stock, no par value (the "Junior Preferred
Shares"), of the Company, at a purchase price of $87.50 per one
one-hundredth of a Junior Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase Shares and related Certificate
duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which 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 __, 1998.
From and after the Stock Acquisition Date (as such term
is defined in the Rights Agreement), if the Rights evidenced by
any Right Certificate are beneficially owned by (i) an Acquiring
Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), (ii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof),
(iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person or any Affiliate or Associate thereof
or (iv) a subsequent transferee of any of the foregoing, such
Rights shall become null and void and no holder hereof shall have
any rights whatsoever with respect to such Rights, whether under
any provision of the Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase
Price and the number and kind of Junior Preferred Shares or other
securities which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events, and in
certain circumstances may be exercised to purchase securities of
issuers other than the Company.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the 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 available free of charge upon written
request from the Company at:
Young & Rubicam Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent or such other office designated by it for such
purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling
the holder to purchase a like aggregate number of one
one-hundredths of a Junior Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive, upon surrender hereof, another Right
Certificate or Right certificates for the number of whole Rights
not exercised.
B-2
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (i) may be redeemed by
the Company at its option at a redemption price of $0.01 per
Right (payable in cash, shares of Common Stock or other
consideration), appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof, at any time prior to the earlier of (x) the Stock
Acquisition Date and (y) the Final Expiration Date, or (ii)
exchanged, in whole or in part, for Common Stock or Common Stock
Equivalents.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (and the Rights
Agreement itself) may be amended by action of the Company's Board
of Directors without the approval of the holders of any of the
Rights.
No fractional Junior Preferred Shares will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one-hundredth,
which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of Junior Preferred Shares or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
B-3
WITNESS the facsimile signature of the proper officers
of the Company.
Dated as of , 19
------------- --
YOUNG & RUBICAM INC.
By
---------------------------------
Name:
Title:
Countersigned:
The Bank of New York, as Rights Agent
By
-----------------------------
Authorized Signatory
Date of Countersignature:
B-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
__________________
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED ________________________ hereby
sells, assigns and transfers unto
_______________________________________________
_____________________________________________ (Please print name
and address of transferee) this Right Certificate, together with
all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________________
Attorney, to transfer the within Right Certificate on the books
of the within-named Company, with full power of substitution.
Dated: _________________, 19__
_____________________________
Signature
Signature Guaranteed:
B-5
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Right 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 in 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 Right Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: , 19
---------------- -- ----------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature of the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
B-6
FORM OF ELECTION TO PURCHASE SHARES
(To be executed if holder desires
to exercise Rights represented by the Right Certificate)
To Young & Rubicam Inc.:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to
purchase the Junior Preferred Shares issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert Social Security or other identifying number: ________
____________________________________________________________________
(Please print name and address)
____________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
of such Rights shall be registered in the name of and delivered
to:
Please insert Social Security or other identifying number: _______
___________________________________________________________________
(Please print name and address)
___________________________________________________________________
B-7
Dated: __________________, 19__
_______________________________
Signature
Signature Guaranteed:
B-8
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right
Certificate are |_| are not |_| being exercised by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it did |_| did not |_| acquire the Rights
evidenced by this Right Certificate from any Person who is, was
or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: , 19
------------------- --
-----------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the
face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-9
