Exhibit 4.1
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FAIR, XXXXX AND COMPANY, INCORPORATED
a Delaware corporation
and
MELLON INVESTOR SERVICES LLC
a New Jersey limited liability company
Rights Agent
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Rights Agreement
Dated as of August 9, 2001
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TABLE OF CONTENTS
Page
1. Certain Definitions.........................................................................................1
2. Appointment of Rights Agent.................................................................................5
3. Issue of Rights Certificates................................................................................5
4. Form of Rights Certificates.................................................................................6
5. Countersignature and Registration...........................................................................7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates..................................................................................7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights...............................................8
8. Cancellation and Destruction of Rights Certificates........................................................10
9. Reservation and Availability of Preferred Stock............................................................11
10. Preferred Stock Record Date................................................................................12
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights................................12
12. Certificate of Adjusted Purchase Price or Number of Shares.................................................19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.......................................19
14. Additional Covenants.......................................................................................22
15. Fractional Rights and Fractional Shares....................................................................22
16. Rights of Action...........................................................................................23
17. Agreement of Rights Holders................................................................................24
18. Rights Certificate Holder Not Deemed a Stockholder.........................................................24
19. Concerning the Rights Agent................................................................................25
20. Merger or Consolidation or Change of Name of Rights Agent..................................................25
21. Duties of Rights Agent.....................................................................................26
22. Change of Rights Agent.....................................................................................28
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23. Issuance of New Rights Certificates........................................................................29
24. Redemption, Termination and Exchange.......................................................................29
25. Notice of Certain Events...................................................................................32
26. Notices....................................................................................................33
27. Supplements and Amendments.................................................................................33
28. Determination and Actions by the Board.....................................................................34
29. Successors.................................................................................................34
30. Benefits of This Agreement.................................................................................34
31. Severability...............................................................................................34
32. Governing Law..............................................................................................34
33. Counterparts...............................................................................................35
34. Descriptive Headings.......................................................................................35
Exhibit A -- Certificate of Designation of Series A
Participating Preferred Stock..................................................A-1
Exhibit B -- Form of Rights Certificate.....................................................B-1
Exhibit C -- Form of Summary of Rights......................................................C-1
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement") is dated as of August 9, 2001,
between FAIR, XXXXX AND COMPANY, INCORPORATED, a Delaware corporation (the
"Company"), and MELLON INVESTOR SERVICES LLC, a New Jersey limited liability
company (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on August 7, 2001, the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of Common Stock, of the Company (the "Common
Stock") outstanding as of the Close of Business (as hereinafter defined) on
August 21, 2001 (the "Record Date"), and contemplates the issuance of one Right
(subject to adjustment as provided herein) for each share of Common Stock issued
between the Record Date and the earlier of the Distribution Date and the
Expiration Date, as such terms are hereinafter defined (with Rights also to be
issued in connection with certain issuances of Common Stock after the
Distribution Date, as provided more fully herein), each Right representing the
right to purchase one one-thousandth of a share of Series A Participating
Preferred Stock, par value $0.01 per share, of the Company (the "Preferred
Stock") having the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A (the "Certificate of
Designation"), upon the terms and subject to the conditions hereinafter set
forth (the "Rights").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of fifteen percent (15%) or more of the shares of Common Stock then outstanding
or who was such a Beneficial Owner at any time on or after the date hereof,
whether or not such Person continues to be the Beneficial Owner of fifteen
percent (15%) or more of the outstanding shares of Common Stock. Notwithstanding
the foregoing:
(i) in no event shall a Person who or which, together with
all Affiliates and Associates of such Person, is the Beneficial Owner
of less than fifteen percent (15%) of the outstanding shares of Common
Stock become an Acquiring Person solely as a result of a reduction of
the number of shares of outstanding Common Stock, including repurchases
of outstanding shares of Common Stock by the Company, which reduction
increases the percentage of outstanding shares of Common Stock
Beneficially Owned (as such term is hereinafter defined) by such
Person; provided, however, that any subsequent increase in the amount
of Common Stock Beneficially Owned by such Person, together with all
Affiliates and Associates of such Person, without the prior
written approval of the Board shall cause such Person to be an
Acquiring Person (unless, measured at such time, such Person would not
be an Acquiring Person);
(ii) the term Acquiring Person shall not mean:
(A) the Company;
(B) any Subsidiary (as such term is hereinafter defined) of
the Company;
(C) any employee benefit plan of the Company or any of its
Subsidiaries;
(D) any entity holding securities of the Company organized,
appointed or established by the Company or any of its Subsidiaries for
or pursuant to the terms of any such plan; or
(iii) any underwriter acting in good faith in a firm
commitment underwriting of an offering of the Company's securities
pursuant to arrangements with the Company that have been approved by
the Board (however, the exception provided by this clause (E) shall no
longer be available in the event that any such underwriter is otherwise
an Acquiring Person on or after the date which is forty (40) days after
the date of initial acquisition of the Company's securities by such
underwriter in connection with such offering); and
(A) no Person shall be deemed to be an Acquiring Person if:
(A)(1) any Schedule 13D under the Exchange Act (as hereinafter
defined), or any comparable or successor report, filed (or required to
be filed) by such Person does not (or would not) state any intention to
or reserve the right to control or influence the management or policies
of the Company or engage in any of the actions specified in Item 4 (or
any comparable or successor Item) of such Schedule 13D (other than the
disposition of Common Stock), (2) either (x) within two (2) Business
Days of being requested by the Company to advise the Company regarding
the same, such Person certifies in writing to the Company that such
Person acquired Beneficial Ownership of fifteen percent (15%) or more
of the outstanding shares of Common Stock inadvertently or without
knowledge of the terms of the Rights, or (y) the Board determines in
good faith that such Person has become an Acquiring Person
inadvertently, (3) such Person divests as promptly as practicable (as
determined in good faith by the Board) a sufficient number of
securities so that such Person would not be deemed to be an Acquiring
Person pursuant to the first sentence of this Section 1(a), (or such
other provisions of this Section 1(a) as may be applicable) and (4)
promptly following such Person's divestiture of such securities, such
Person certifies to the Board that such Person would no longer be
deemed an Acquiring Person as defined pursuant to the first sentence of
this Section 1(a) (or such other provisions of this Section 1(a) as may
be applicable); or (B) by reason of such Person's Beneficial Ownership
of fifteen percent (15%) or more of the outstanding shares of Common
Stock on the date hereof if prior to the Record Date such Person
notifies the
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Board that such Person is no longer the Beneficial Owner of fifteen
percent (15%) or more of the then outstanding shares of Common Stock.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner," and shall be
deemed to "Beneficially Own" or have "Beneficial Ownership," of any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own (within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act as in
effect on the date hereof);
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed (under this clause (A)) the "Beneficial Owner," and
shall not be deemed (under this clause (A)) to "Beneficially Own" or
have "Beneficial Ownership," of securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for payment or exchange; or (B) the right to vote or
dispose of pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not
be deemed the "Beneficial Owner," and shall not be deemed to
"Beneficially Own" or have "Beneficial Ownership," of any security
under this clause (B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are Beneficially Owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or with which such Person or any of such Person's
Affiliates or Associates have otherwise formed a group, for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) of subparagraph (ii) of this paragraph (c)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of California or the
State of New Jersey are authorized or obligated by law or executive order to
close.
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(e) "Close of Business" on any given date shall mean 5:00 p.m.,
San Francisco time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., San Francisco time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company or any other shares of capital stock of the Company
into which such Common Stock may be reclassified or exchanged, except that
"Common Stock" when used with reference to stock issued by any Person other than
the Company shall mean the capital stock with the greatest Voting Power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person or, if such Person is a Subsidiary of another Person,
of the Person which ultimately controls such first-mentioned Person and which
has issued and outstanding such capital stock, equity securities or equity
interests.
(g) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Permitted Offer" shall mean a tender or exchange offer for
all outstanding shares of Common Stock at a price and on terms determined, prior
to the date of the first acceptance of payment for any of such shares, to be
fair to, and in the best interests of, the Company and its stockholders (other
than the offeror or any Affiliate or Associate thereof) by at least a majority
of the members of the Board who are not (i) officers of the Company, (ii) the
offeror, (iii) Acquiring Persons or (iv) Affiliates or Associates of the offeror
or any Acquiring Person.
(j) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, association, trust or any
other entity.
(k) "Preferred Stock" shall mean the Series A Participating
Preferred Stock, par value $0.01 per share, of the Company.
(l) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(m) A "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or voting interests is owned, directly or indirectly, by such Person,
or which is otherwise controlled by such Person.
(n) "Triggering Event" shall mean a Section 11 Event (as defined
in Section 11(a) hereof) or a Section 13 Event (as defined in Section 13(a)
hereof).
(o) "Voting Power" shall mean the voting power of all securities
of the Company then outstanding and generally entitled to vote for the election
of directors of the Company.
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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 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 the Company appoints one
or more co-Rights Agents, the respective duties of the Rights Agents and any
co-Rights Agents shall be as the Company shall determine and shall not be
inconsistent with this Agreement.
3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Stock Acquisition Date or (ii) the
Close of Business on the tenth (10th) Business Day (or such later date as may be
determined by action of the Board) after the date of the commencement
(determined in accordance with Rule 14d-2 of the General Rules and Regulations
under the Exchange Act as in effect as the date hereof or, if no longer
applicable, the intent of such Rule 14d-2 as in effect on the date hereof as
determined in good faith by the Board) by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or any
of its Subsidiaries, or any entity organized, appointed or established by the
Company or any of its Subsidiaries for or pursuant to the terms of any such
plan) of a tender or exchange offer (other than a Permitted Offer) the
consummation of which would result in such Person becoming an Acquiring Person
(including any such date which is on or after the date of this Agreement and
prior to the issuance of the Rights) (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights shall be evidenced by
the certificates for Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates and (y) the Rights
(and the right to receive certificates therefor) shall be transferable only in
connection with the transfer of the underlying shares of Common Stock. As soon
as practicable after the Distribution Date, the Company shall provide the Rights
Agent with a list of holders of Common Stock and all other relevant information
and the Rights Agent shall send, by first-class, insured, postage prepaid mail,
to each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a certificate for Rights, in substantially the form of Exhibit B hereto
(the "Rights Certificates"), evidencing one Right for each share of Common Stock
so held (subject to adjustment as provided herein). As of and after the
Distribution Date, the Rights shall be evidenced solely by such Rights
Certificates.
Promptly following the Record Date, the Company shall send a copy of a
Summary of Rights, in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date, until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights shall be evidenced by such certificates for the Common Stock
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the surrender for transfer
of any of the certificates for the Common Stock outstanding on the Record Date
shall
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also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(b) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) after
the Record Date, but prior to the earlier of the Distribution Date or the
Expiration Date, shall be deemed also to be certificates for Rights, and shall
have impressed, printed, stamped, written or otherwise affixed onto them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Fair, Xxxxx
and Company, Incorporated (the "Company") and Mellon Investor Services
LLC (the "Rights Agent") dated as of August 9, 2001 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights "Beneficially Owned" by "Acquiring Persons" (as such terms are
defined in the Rights Agreement) or certain related parties, as well
as subsequent holders of such Rights, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
shares and of assignment and certificates to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, and do not affect the
rights, duties or responsibilities of the Rights Agent, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or interdealer
quotation system on which the Rights may from time to time be listed or traded,
or to conform to usage. Subject to the provisions of Section 11 and Section 23
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share set forth therein
(the "Purchase Price"), such Purchase Price to be initially equal to the amount
set forth in Section 7(b) below but the number of one one-thousandths of a share
and the Purchase Price shall be subject to adjustment as provided herein.
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(b) Any Rights Certificate issued pursuant to Section 3(a) hereof that
represents Rights Beneficially Owned by an Acquiring Person or any Associate or
Affiliate thereof, any Rights Certificate issued at any time upon the transfer
of any Rights to such an Acquiring Person or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate, and any
Rights Certificate issued pursuant to Section 6, Section 11 or Section 23 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or an Associate of
an Acquiring Person (as such terms are defined in the Rights
Agreement). This Rights Certificate and the Rights represented hereby
may become null and void under the circumstances specified in Section
7(e) of the Rights Agreement.
The provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate.
5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, its President, its Chief Financial Officer or
any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
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 Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the Person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent of
any necessary information, the Rights Agent will keep or cause to be kept, at
its office designated for such purpose, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 15 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on
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the Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock (or, after the occurrence of a
Triggering Event, shares of Common Stock or other securities and property, as
the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purposes in Section 26 hereof. Subject to
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them (as the Company or the Rights Agent may reasonably request) of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
Certificate or the Affiliates or Associates thereof, the Rights Agent shall
(subject to Section 7(e) hereof) thereupon countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates. The Rights
Agent shall have no duty or obligation under this Section 6 unless and until it
is satisfied that all applicable taxes and charges have been paid in full.
(b) Subject to the provisions of Sections 7(e), 7(f) and 15 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 Rights
Certificate and such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
or the Rights Agent shall reasonably request, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company shall execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to the provisions of Sections 7(e) and 7(f) hereof, the
registered holder of any Rights 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 presentation of the Rights Certificate, with
the appropriate form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent set forth in
Section 26 hereof, together with payment of the Purchase Price for each one
one-thousandth of a share of Preferred Stock (or such other securities or
property 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 August 9, 2011 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 24 hereof, (iii) the consummation of a transaction contemplated by
Section 13(d) hereof or (iv) the time at which the Rights are exchanged as
provided in Section 24(c) hereof (such earliest time being herein referred to as
the "Expiration Date"). Notwithstanding any other provision of this Agreement,
any Person who prior to the Distribution Date becomes a record
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holder of shares of Common Stock may exercise all of the rights of a registered
holder of a Rights Certificate with respect to the Rights associated with such
shares of Common Stock in accordance with and subject to the provisions of this
Agreement, including the provisions of Section 7(e) hereof, as of the date such
Person becomes a record holder of shares of Common Stock.
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be Two
Hundred Forty Dollars ($240.00), 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) of this
Section 7 below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the appropriate form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the fractional interests in
shares of Preferred Stock (or other securities or property) to be purchased and
an amount equal to any applicable tax or charge in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall,
subject to Section 21(k) hereof, thereupon promptly (i)(A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent) certificates for the number of one
one-thousandths of a share of Preferred Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company, in its sole discretion, shall have elected to
deposit the fractional interests in shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the one one-thousandths of a share of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder and, (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities of the Company, and/or distribute other property pursuant to Section
11(a), the Company shall make all arrangements necessary so that such other
securities and/or property are available for distribution by the Rights Agent,
if and when appropriate. In addition, in the case of an exercise of the Rights
by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate to the registered holder thereof after imprinting, stamping
or otherwise indicating thereon that the rights represented by such Rights
Certificate no longer include the rights provided by Section 11(a)(ii) hereof;
provided, however, that if less than all the Rights represented by such Rights
Certificate were so exercised, the Rights Agent shall indicate on the Rights
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall
exercise (except pursuant to Section 11(a)(ii)) less than all the Rights
evidenced thereby, a new Rights
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Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Rights Certificate or to such registered holder's duly authorized assigns,
subject to the provisions of Section 6 and Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if
there occurs any Triggering Event, then any Rights that are or were on or after
the Distribution Date Beneficially Owned by an Acquiring Person or any Associate
or Affiliate of an Acquiring Person shall become null and void, without any
further action, and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. Without limiting the foregoing sentence, Rights held by
the following Persons shall be null and void without any further action: (i) any
direct or indirect transferee of any Rights that are or were on or after the
Distribution Date Beneficially Owned by an Acquiring Person or any Associate or
Affiliate of an Acquiring Person; (ii) any direct or indirect transferee of any
Rights that were on or before the Distribution Date Beneficially Owned by an
Acquiring Person or any Associate or Affiliate of an Acquiring Person if the
transferee received such Rights, directly or indirectly, (A) from an Acquiring
Person or any Associate or Affiliate of an Acquiring Person (x) as a result of a
distribution by such Acquiring Person or any Associate or Affiliate of an
Acquiring Person to holders of its equity securities or similar interests
(including, without limitation, partnership interests) or (y) pursuant to any
continuing agreement, arrangement or understanding with respect to the Rights or
(B) in a transfer (or series of transfers) which the Board determines is part of
a plan, agreement, arrangement or understanding which has the purpose or effect
of avoiding the provisions of this Section 7(e); and (iii) subsequent
transferees of Persons referred to in the foregoing clauses (i) and (ii) as well
as this clause (iii). The Company shall notify the Rights Agent when this
Section 7(e) applies and shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) are complied with, but neither the Company nor
the Rights Agent shall have any liability to any holder of Rights or any Rights
Certificate or to any other Person as a result of the Company's failure to make
any determination with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the Certificate contained in the appropriate
form of Election to Purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
or the Rights Agent shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for
10
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Rights Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it shall cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock,
or any authorized and issued shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and other securities)
held in its treasury, the number of shares of Preferred Stock (and, following
the occurrence of a Triggering Event, shares of Common Stock and other
securities) that will be sufficient (in accordance with the provisions of this
Agreement, including Section 11(a)(iii) hereof) to permit the exercise in full
of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange or quoted on any national quotation system, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares (or other securities) reserved for such issuance
to be listed on such exchange or quoted on such system upon official notice of
issuance upon such exercise.
(c) If then required by applicable law, the Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date after
the occurrence of a Triggering Event as to which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, (B) the Expiration Date or (C) the date the Company receives an
opinion of counsel to the effect that the maintenance of such registration
statement in effect is no longer necessary. If then required by applicable law,
the Company will also take such action as may be appropriate under the
securities or "blue sky" laws of the various states. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement or to comply with such
blue sky laws. Upon any such suspension, the Company shall promptly notify the
Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained.
(d) The Company covenants and agrees that it shall take all such action
as may be necessary to ensure that all one one-thousandths of a share of
Preferred Stock and/or
11
other securities delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(e) The Company further covenants and agrees that it shall pay when due
and payable any and all taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates or of any certificates for one
one-thousandths of a share of Preferred Stock and/or other securities upon the
exercise of Rights. The Company shall not, however, be required to (i) pay any
transfer tax or charge which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or in respect of the
issuance or delivery of the shares of Preferred Stock and/or other securities in
a name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or (ii) issue or deliver any
certificates for shares of Preferred Stock and/or other securities in a name
other than that of the registered holder upon the exercise of any Rights until
such tax or charge shall have been paid (any such tax or charge being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax or charge is
due.
10. Preferred Stock Record Date. Each Person in whose name any certificate
for one one-thousandths of a share of Preferred Stock (or other securities) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the fractional shares of Preferred Stock (or
other securities) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
presented and payment of the Purchase Price (and any applicable transfer taxes
or charges) was made; provided, however, that if the date of such presentation
and payment is a date upon which the Preferred Stock (or other securities)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Stock (or other
securities) transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate, as such, 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.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
12
reclassification, and the number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock and other securities which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) Subject to Section 24(c) hereof, in the event any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person other than pursuant to a Permitted Offer (such an event being a
"Section 11 Event"), then, promptly following the first occurrence of such a
Section 11 Event, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall, for a period of sixty (60)
days after the later of the occurrence of any such Section 11 Event and the
effective date of an appropriate registration statement pursuant to Section 9
hereof, have a right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of
fractional interests in shares of Preferred Stock, 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 number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to the Section 11 Event at issue and (y) dividing that product by fifty
percent (50%) of the current market price per one share of Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
the Section 11 Event at issue (such number of shares being referred to as the
"number of Adjustment Shares"); provided, however, that 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);
and provided, further, that such sixty (60) day period shall not be deemed to
run during any period in which the exercise of the Rights or the fulfillment by
the Company or the Rights Agent of its or their obligations under this Agreement
shall be enjoined or otherwise prohibited in full or in part by any court or
other governmental agency or body.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii) hereof, the Company may, if a majority of the
Board then in office determines that such action is necessary or appropriate and
not contrary to the interests of holders of Rights, elect to (and, in the event
that the Board has not exercised the exchange right contained in Section 24(c)
hereof and there are not sufficient treasury shares and authorized but unissued
shares of Common Stock to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, the Company shall) take all such
action as may be necessary to authorize, issue or pay, upon the exercise of the
Rights, cash (including by way of a reduction of the Purchase Price), property,
shares of Common Stock, other securities (whether equity or debt securities of
the Company, any Subsidiary of the Company, or otherwise) or any combination
thereof having an aggregate value equal to the value of the shares of Common
Stock which otherwise would have been issuable pursuant to Section 11(a)(ii)
hereof, which aggregate value shall be determined by a nationally recognized
investment banking firm selected by a majority of the
13
Board. For purposes of the preceding sentence, the value of the Common Stock
shall be determined pursuant to Section 11(d) hereof and the value of any
fractional interests in preferred stock or preference stock which a majority of
the Board determines to be a "common stock equivalent" shall be deemed to have
the same value as the Common Stock. Any such election by the Board must be made
and publicly announced within sixty (60) days following the date on which the
Section 11 Event at issue shall have occurred with prompt notice thereof to the
Rights Agent. Following the occurrence of such Section 11 Event, a majority of
the Board then in office may suspend the exercisability of the Rights for a
period of up to sixty (60) days following the date on which such Section 11
Event shall have occurred to the extent that such Directors have not determined
whether to exercise their rights of election under this Section 11(a)(iii). If
the Board shall determine in good faith that it is likely that sufficient
additional shares of Common Stock or common stock equivalents could be
authorized for issuance upon exercise in full of the Rights, the sixty (60) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days following the occurrence of the Section 11 Event at issue,
in order that the Company may seek stockholder approval for the authorization of
such additional shares. 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 with prompt notice thereof to the Rights Agent.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of any interests in Preferred Stock entitling
them (for a period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase any interests in Preferred Stock (or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock ("equivalent preferred stock")) or securities convertible
into Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as defined in
Section 11(d)) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock 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 reasonably and with good faith to the holders of Rights by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and conclusive for all purposes.
Shares of Preferred Stock owned by or held for the account of the Company 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 be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
14
(c) If the Company shall fix a record date for the making of a
distribution to all holders of interests in Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights, options 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 then current
market price (as defined in Section 11(d) hereof) per share of Preferred Stock
on such record date, less the fair market value (as determined reasonably and
with good faith to the holders of Rights by the Board, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and conclusive for all purposes) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription
rights, options or warrants distributable in respect of one share of Preferred
Stock and the denominator of which shall be the then current market price (as
defined in Section 11(d) hereof) per share of the Preferred Stock. 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 be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than as
provided in Section 11(a)(iii) hereof, the "current market price" per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Common Stock is determined in whole or in part during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock or (B) any subdivision,
combination or reclassification of such Common Stock, 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, combination
or reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend 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 or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange but
are listed or quoted on The Nasdaq Stock Market, the last reported sale price,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices as reported by Nasdaq, or, if the shares of Common Stock are
not listed or quoted on The Nasdaq Stock Market, 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 OTC Bulletin Board or such other
system then in use, or, if on any such date the
15
shares of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined reasonably and with good faith by the Board
shall be used and shall be binding on the Rights Agent and conclusive for all
purposes. The term "Trading Day" shall mean a day on which the principal
national securities exchange or The Nasdaq Stock Market, as the case may be, on
which the shares of Common Stock are principally listed or admitted to trading
or quoted is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading or quoted on any national securities
exchange or The Nasdaq Stock Market, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share determined reasonably and with good faith to the
holders of Rights by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share (or one one-thousandth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the Common
Stock in Section 11(d)(i) (other than the last sentence thereof). If the current
market price per share (or one one-thousandth of a share) of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in Section 11(d)(i),
the "current market price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and recapitalization
with respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of the Common Stock and the
"current market price" per one one-thousandth of a share of Preferred Stock
shall be equal to the current market price per share of the Common Stock (as
appropriately adjusted). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Expiration Date.
(f) If as a result of any provision of this Section 11, the holder of
any Right shall become entitled to receive any shares of capital stock of the
Company other than Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
16
practicable to the provisions with respect to the shares (and the related
Purchase Price) contained in this Section 11, and the provisions of Sections 7,
9, 10, 13 and 15 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock 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) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths
of a share of Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one millionth) 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 and promptly notify the
Rights Agent of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 15 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates 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 Rights Certificates on the record date
specified in the public announcement.
17
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandths of a
share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of one
one-thousandths of a share of Preferred Stock or shares of Common Stock or other
securities issuable upon exercise of the Rights (aggregating, for this purpose,
an appropriate amount of the Purchase Price for fractional shares to compare
such aggregated amount to the par value for a whole share), 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 one one-thousandths of a share of Preferred Stock or shares of
Common Stock or other securities at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock and
common stock equivalents, or Preferred Stock and preferred stock equivalents, a
portion of the consideration paid upon such exercise, equal to at least the then
par value, if any, of a share of Common Stock or Preferred Stock of the Company,
as the case may be, shall be allocated as the payment for each share of Common
Stock or Preferred Stock of the Company, as the case may be, so received.
(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 (and shall promptly notify the
Rights Agent of any such election) until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the shares
of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Preferred Stock 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) Anything to the contrary in this Section 11 notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, stock dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of
Preferred Stock shall not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock in a
18
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
(o) The exercise of Rights under Section 11(a)(ii) hereof shall only
result in the loss of rights under Section 11(a)(ii) hereof to the extent so
exercised and shall not otherwise affect the rights represented by the Rights
under this Agreement, including the rights represented by Section 13 hereof.
12. Certificate 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,
reasonably detailed statement of the facts and computations accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock and the Common Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Notwithstanding the foregoing provisions of this Section 12, the failure of the
Company to make such certification or give such notice shall not affect the
validity, or the force or effect, of the requirement for such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person, (y) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such merger (other than, in the case of any transaction described
in (x) or (y), a merger or consolidation which would result in all of the Voting
Power represented by the 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 Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such merger or consolidation),
or (z) the Company shall sell, mortgage or otherwise transfer (or one or more of
its Subsidiaries shall sell, mortgage or otherwise transfer), in one or more
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 (any of the events described in the foregoing clauses
(x), (y) or (z) being herein referred to as a "Section 13 Event"), then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right (other than as provided in Section 7(e) hereof) shall have the right to
receive, upon the exercise thereof at the
19
then current Purchase Price in accordance with the terms of this Agreement, such
number of shares of freely tradable Common Stock of the Principal Party (as
hereinafter defined), free and clear of liens, rights of call or first refusal,
encumbrances or other adverse claims, as shall be equal to the result obtained
by (x) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section 11(a)(ii) hereof) 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 consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; 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) in connection with such consummation as may
be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (x) or
(y) of the first sentence of this Section 13, the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to the
merger or consolidation (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 in this Section 13, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (A) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; (B)
in case such Person is a Subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Stock of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (C) 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 clauses (A) and (B) above shall apply to each of
the chains of ownership having an interest in such joint venture as if
such joint venture were a Subsidiary of each such joint venturer 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.
20
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and each Principal Party and each other Person who may
become a Principal Party as a result of such Section 13 Event shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of such Section 13 Event,
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 exercise of
the Rights on an appropriate form, will use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date;
(ii) use its best efforts to (x) 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
and (y) cause the Rights and the securities purchasable upon exercise
of the Rights to be listed on any national securities exchange or
national quotation system upon which its Common Stock is listed, traded
or quoted; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all material respects with the requirements for registration
on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 13
shall be in addition to the rights to exercise Rights and adjustments under
Section 11(a)(ii) hereof and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in clauses (x) or
(y) of Section 13(a) hereof if (i) such transaction is (x) consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons) and (y)
related to such Permitted 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
Permitted Offer and (iii) the form of consideration being offered to the
remaining holders of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this subsection (d), all
Rights hereunder shall expire.
21
14. Additional Covenants.
(a) The Company covenants and agrees that after the Stock Acquisition
Date it shall not (i) consolidate with, (ii) merge with or into or (iii) sell or
transfer to any other Person, in one or more 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, if at the time of or after
such consolidation, merger or sale there are any charter or by-law provisions or
any rights, warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to be afforded
by the Rights. The Company shall not consummate any such consolidation, merger
or sale 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 subsection.
(b) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 24 hereof, take any action the
purpose or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
15. 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(n) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 15(a), the current
market value of a whole Right shall be (except as otherwise provided in the last
sentence of this Section 15(a)) 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, 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 Nasdaq Stock Market or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined reasonably and with good faith to the holders of Rights by the Board
shall be used and shall be binding on the Rights Agent and conclusive for all
purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock 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 fractional interests in shares of Preferred
Stock
22
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a share
of Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one
one-thousandth of a share of Preferred Stock. For purposes of this Section
15(b), the current market value of one one-thousandth of a share of Preferred
Stock shall be determined in the manner set forth in Section 11(d) hereof for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Common Stock. For purposes of this Section
15(c), the current market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the date of such
exercise.
(d) Except as otherwise expressly provided herein, the holder of a
Right by the acceptance of the Right expressly waives such holder's right to
receive any fractional Rights or any fractional shares (other than, in the case
of Preferred Stock, fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of a Right.
(e) Whenever a payment for fractional Rights or fractional shares is to be
made by the Rights Agent, the Corporation shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payments and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of, any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
16. Rights of Action. All rights of action in respect of this Agreement,
except those rights of action expressly vested in the Rights Agent under this
Agreement, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
23
hereunder of any Person subject to this Agreement. Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
17. Agreement of Rights Holders. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent and only if
surrendered at the office of the Rights Agent set forth in Section 26 hereof,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates attached;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of the inability of the Company or the Rights
Agent to perform any of its or their obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree, judgment or
ruling (whether interlocutory or final) issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree, judgment or ruling lifted or
otherwise overturned as soon as possible.
18. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the shares of Preferred Stock, Common Stock
or any other securities of the Company which may at any time be issuable upon
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a 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 subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions thereof.
24
19. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the preparation, delivery,
administration, amendment and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, each as determined by a final, non-appealable order, judgment,
decree or ruling of a court of competent jurisdiction), for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including, without limitation, the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly. The provisions of this Section 19 and Section 21 below shall
survive the termination of this Agreement, the termination and expiration of the
Rights and the resignation or removal of the Rights Agreement. The costs and
expenses incurred in enforcing this right of indemnification shall be paid by
the Company.
(b) The Rights Agent shall be authorized to rely on, 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 acceptance and administration of this
Agreement or the exercise or performance of its duties hereunder in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth
in Section 21. The Rights Agent shall not be deemed to have knowledge of any
event of which it was supposed to receive notice thereof hereunder, and the
Rights Agent shall be fully protected and shall incur no liability for failing
to take any action in connection therewith unless and until it has received such
notice in writing.
20. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stockholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such Person would be eligible
for appointment as a successor Rights Agent under the provisions of Section 22
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the
25
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
21. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations, and only the duties and obligations, expressly imposed by this
Agreement (and not implied duties or obligations) upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it (who
may be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of current market price) be proved or established by the Company
prior to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof shall be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent and the Rights Agent shall incur no liability on or in respect of any
action taken, suffered or omitted by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct as finally determined by a court of
competent jurisdiction. Anything in this Agreement to the contrary
notwithstanding, in no case will the Rights Agent be liable for special,
indirect, punitive, incidental or consequential loss or damages of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the possibility of such damages. Notwithstanding anything to
the contrary herein, the liability of the Rights Agent hereunder will be limited
to the amount of fees paid by the Company to the Rights Agent hereunder.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except as
26
to the fact that it has countersigned the Rights Certificates) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility or have any
liability in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible or liable for any breach
by the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible or liable for any adjustment
required under the provisions of Section 11 or 13 hereof or responsible or
liable for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt of a certificate pursuant to Section 12 describing any such
adjustment); nor shall it be responsible or liable for any determination by the
Board of the current market value of the Rights or Preferred Stock or Common
Stock pursuant to the provisions of Section 15 hereof; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance 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 and
certificates delivered pursuant to any provision hereof from the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and such advice or instructions
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted to be taken by it in accordance with the advice or written
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Agreement and the
date on and/or after which such action shall be taken, suffered or omitted and
the Rights Agent shall not be liable for any action taken, suffered or omitted
in accordance with a proposal included in any such application on or after the
date specified therein (which date shall not be less than three (3) Business
Days after the date any such officer actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking or omitting any such action, the Rights Agent has received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, Affiliate, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the
27
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 the Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.
(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 or to the holders of the
Rights or any other Person resulting from any such act, omission, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction) in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
the Rights Agent believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause l or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
22. 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 and Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (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 Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Company), then the registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a Person organized and doing business under the laws of the United
States or of the State of New York or the State of California (or of any other
state of the United States so long as such Person is authorized to do business
in the State of New York or the State of California), in good standing, which is
authorized under such laws to exercise corporate trust or stockholder services
powers and is subject to supervision or examination by federal or state
authority and
28
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000.00 or (b) an Affiliate of a
Person described in clause (a) of this sentence. 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 mail notice thereof in writing to the predecessor Rights Agent and
each transfer agent of the Common Stock and Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 22, 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.
23. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price per share and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or otherwise under any employee plan or arrangement, which plan or
arrangement is existing as of the Distribution Date, or upon the exercise,
conversion or exchange of any other securities issued by the Company on or prior
to the Distribution Date, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificates shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificates would be issued, and (ii) no such Rights
Certificates shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
24. Redemption, Termination and Exchange.
(a) (i) The Board may, at its option, at any time prior to the earlier
of (x) the Stock Acquisition Date or (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 $0.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The Company may, at its option, pay the Redemption Price in any form of
consideration deemed appropriate by the Board.
(ii) In addition, and notwithstanding the provisions of Section
24(a)(i) hereof, the Board may redeem all but not less than all of the then
outstanding Rights at the Redemption Price on or after the Stock Acquisition
Date but prior to any Section 13 Event either
29
(x) in connection with any Section 13 Event in which all holders of Common Stock
are treated alike and not involving (other than as a holder of Common Stock
being treated like all other such holders) an Acquiring Person or an Affiliate
or Associate thereof or any other Person in which such Acquiring Person or
Affiliate or Associate thereof has any interest, or any other Person acting
directly or indirectly on behalf of or in association with any such Acquiring
Person or Affiliate or Associate thereof, or (y) following the occurrence of a
Section 11 Event, and the expiration of any period during which the holder of
Rights may exercise the rights under Section 11(a)(ii) hereof as a result
thereof, if and for as long as any Acquiring Person having triggered the Section
11 Event at issue is not thereafter the Beneficial Owner of fifteen percent
(15%) or more of the outstanding shares of Common Stock, and at the time of
redemption there are no other Persons who are Acquiring Persons.
(b) (i) In the case of a redemption permitted under Section 24 (a)(i)
hereof, immediately upon the action of the Board ordering the redemption of the
Rights, evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. In the case of a redemption permitted
only under Section 24(a)(ii) hereof, evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten (10)
Business Days following the giving of notice of such redemption to the holders
of such Rights if no Section 11 Event shall have occurred, and, if a Section 11
Event shall have occurred, upon the later of ten (10) Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) hereof may be exercised as a result thereof.
Within ten (10) days after the action of the Board ordering any such redemption
of the Rights, the Company shall give prompt written notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
(ii) In the case of a redemption permitted under Section 24(a)(i)
or (ii), 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 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 Certificates shall be null and void without any further
action by the Company.
(c) (i) Subject to the limitations of applicable laws, the Board may,
at its option and at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of
Section 7(e) hereof) for (A) shares of Common Stock 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 Effective Date
(the
30
"Exchange Shares"), or (B) Substitute Consideration (as that term is defined
below). The Board may determine, in its sole discretion, whether to deliver
Exchange Shares or Substitute Consideration. Notwithstanding the foregoing, the
Board shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty
percent (50%) or more of the Common Stock then outstanding.
(ii) In the event the Board shall determine to deliver Substitute
Consideration in exchange for Rights, the Company shall (1) determine the value
of the Exchange Shares (the "Exchange Value"), and (2) with respect to each
Right to be exchanged, make adequate provision to substitute for Exchange Shares
the following (the "Substitute Consideration"): (v) cash, (w) Common Stock or
common stock equivalents (as that term is defined in Section 11(a)(iii) hereof)
or Preferred Stock or equivalent preferred stock (as that term is defined in
Section 11(b) hereof), (x) debt securities of the Company, (y) other assets, or
(z) any combination of the foregoing, having an aggregate value equal to the
Exchange Value, where such aggregate value has been determined by the Board
based upon the advice of a nationally recognized investment banking firm
selected by the Board. For purposes of this Section 24(c), the value of a share
of Common Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on the day that is the later of
(x) the first occurrence of a Section 11 Event or (y) the date on which the
Company's right of redemption pursuant to Section 24(a)(i) hereof expires; and
the value of any common stock equivalent shall be deemed to have the same value
as the Common Stock on such date.
(iii) Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to this Section 24(c), and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
Exchange Shares or Substitute Consideration for each Right exchanged by such
holder. The Company shall promptly give public notice and notice to the Rights
Agent of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of Common Stock (or
Substitute Consideration) for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(iv) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24(c), the Company shall take all such action as may be necessary
to authorize additional shares of Common Stock or Preferred Stock for issuance
upon exchange of the Rights.
31
(v) The Company shall not be required 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 Rights 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 Section
24(c)(v), the current market value of a whole share of Common Stock shall be
determined in the manner set forth in Section 11(d) hereof for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24(c).
25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.
(b) In case any Triggering Event shall occur, then, in any such case,
the Company or the Principal Party, as the case may be, shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Triggering
Event, which shall specify the event and the consequences of the Triggering
Event to holders of Rights under Section 11(a)(ii) or 13(a) hereof, as the case
may be.
(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
32
26. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, or sent by nationwide overnight delivery, addressed (until another
address is filed in writing with the Rights Agent) or by facsimile transmission
as follows:
Fair, Xxxxx and Company, Incorporated
000 Xxxxx Xxxxx Xxxx
Xxx Xxxxxx, XX 00000
Attention: Corporate Secretary
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 22, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, or sent by nationwide overnight
delivery, addressed (until another address is filed in writing with the Company)
or by facsimile transmission as follows:
Mellon Investor Services LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Relationship Manager
Facsimile No.: (000) 000-0000
with a copy to:
Mellon Investor Services
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid, or sent
by nationwide overnight delivery, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
27. Supplements and Amendments. The Company and the Rights Agent may from
time to time supplement or amend this Agreement without approval of any holders
of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable or (iv) on or following the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates. 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
33
the terms of this Section 27, and provided such supplement or amendment does not
change or increase the Rights Agent's rights, duties or obligations, the Rights
Agent shall execute such supplement or amendment. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
28. Determination and Actions by the Board. For all purposes of this
Agreement, any calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock or any other securities of
which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. Except as otherwise
provided herein, the Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or 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 a determination to redeem or not redeem the Rights or to
amend this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties and (y) not subject the
Board to any liability to the holders of the Rights Certificates. The Rights
Agent may hereby assume without any need to investigate that the Board has acted
in good faith and shall be fully protected and incur no liability in reliance
thereon.
29. 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.
30. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Stock).
31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
32. Governing Law. This Agreement, each Right and each Rights 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 to
be performed entirely within such state; provided, however, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall
34
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such
State.
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.
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.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FAIR, XXXXX AND COMPANY, INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Title: Vice President, Chief Financial Officer
and Secretary
-------------------------------------
MELLON INVESTOR SERVICES LLC, as Rights Agent
By:/s/ Xxxxxx Xxxxxxxx
------------------------------------------
Title: Vice President
-----------------------------
36
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF SERIES A PARTICIPATING PREFERRED STOCK
OF
FAIR, XXXXX AND COMPANY, INCORPORATED
The undersigned, Xxxx X. Xxxxxxxx, the Vice President, Secretary and Chief
Financial Officer of Fair, Xxxxx and Company, Incorporated, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
August 7, 2001, adopted the following resolution creating a series of Two
Hundred Thousand (200,000) shares of Preferred Stock, par value $0.01 per share,
designated as Series A Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby
is created, and that the designation and amount thereof and the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
1. Designation and Amount. The shares of such series shall be designated as
"Series A Participating Preferred Stock," par value $0.01 per share, and the
number of shares constituting such series shall be Two Hundred Thousand
(200,000). Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series A Participating Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating 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 any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or
A-1
fraction of a share of Series A Participating Preferred Stock in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $25.00 or, (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock. In the event the Corporation
shall at any time after the close of business on August 9, 2001 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, then in each such case the amount to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Participating Preferred Stock as provided in paragraph (A) above 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 $25.00 per share on the Series A
Participating 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 Series A Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A Participating
Preferred Stock unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A
Participating 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 Series A Participating 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 Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
3. Voting Rights. The holders of shares of Series A Participating Preferred
Stock shall have the following voting rights:
A-2
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Participating Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock into a greater number
of shares or (iii) combine the outstanding Common Stock into a smaller number of
shares, by reclassification or otherwise, then in each such case the number of
votes per share to which holders of shares of Series A Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, the holders of shares of Series A Participating
Preferred Stock and the holders of shares of Common Stock and 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 Series A Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends thereon,
the holders of the Series A Participating Preferred Stock, voting as a separate
series from all other series of Preferred Stock and classes of capital stock,
shall be entitled to elect two members of the Board of Directors in addition to
any Directors elected by any other series, class or classes of securities and
the authorized number of Directors will automatically be increased by two.
Promptly thereafter, the Board of Directors of this Corporation shall, as soon
as may be practicable, call a special meeting of holders of Series A
Participating Preferred Stock for the purpose of electing such members of the
Board of Directors. Said special meeting shall in any event be held within 45
days of the occurrence of such arrearage.
(ii) During any period when the holders of Series A Participating
Preferred Stock, voting as a separate series, shall be entitled and shall have
exercised their right to elect two Directors, then and during such time as such
right continues (a) the then authorized number of Directors shall remain
increased by two, and the holders of Series A Participating Preferred Stock,
voting as a separate series, shall remain entitled to elect the additional
Directors so provided for, and (b) each such additional Director shall not be a
member of any existing class of the Board of Directors, but shall serve until
the next annual meeting of stockholders for the election of Directors, or until
his or her successor shall be elected and shall qualify, or until his or her
right to hold such office terminates pursuant to the provisions of this Section
3(C).
(iii) A Director elected pursuant to the terms hereof may be removed
with or without cause by the holders of Series A Participating Preferred Stock
entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders
for the election of Directors and while the holders of Series A Participating
Preferred Stock shall be entitled to elect two Directors, there are fewer than
two such Directors in office by reason of resignation, death or removal, then,
promptly thereafter, the Board of Directors shall call a
A-3
special meeting of the holders of Series A Participating Preferred Stock for the
purpose of filling such vacancy(ies) and such vacancy(ies) shall be filled at
such special meeting. Such special meeting shall in any event be held within 45
days of the occurrence of any such vacancy(ies).
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series A Participating Preferred Stock
outstanding are paid, and, in addition thereto, at least one regular dividend
has been paid subsequent to curing such arrearage, the term of office of any
Director elected pursuant to this Section 3(C), or his or her successor, shall
automatically terminate, and the authorized number of Directors shall
automatically decrease by two, and the rights of the holders of the shares of
the Series A Participating Preferred Stock to vote as provided in this Section
3(C) shall cease, subject to renewal from time to time upon the same terms and
conditions.
(D) Except as set forth herein or as otherwise provided by law, holders of
Series A Participating 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 and any other capital stock of the Corporation
having general voting rights as set forth herein) for taking any corporate
action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Participating Preferred Stock
except dividends paid ratably on the Series A Participating 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 on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Participating Preferred Stock
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock except in accordance with
a purchase offer made in writing or by
A-4
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.
5. Reacquired Shares. Any shares of Series A Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
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 Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received per share, the greater of $1,000.00 or 1,000 times the payment made per
share of Common Stock, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Participating 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 Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as
set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalization with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Participating Preferred Stock and
Common Stock, respectively, holders of Series A Participating 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 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series A Participating 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, following
payment in full of all liquidation preferences of all shares senior to Common
Stock (including the Series A Participating Preferred Stock), there are not
sufficient assets available to permit payment in full
A-5
of the Common Adjustment, then the remaining assets shall be distributed ratably
to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification or
otherwise, 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.
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
or any other property, then in any such case the shares of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash 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 after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Participating 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 are outstanding immediately prior to
such event.
8. Redemption. The shares of Series A Participating Preferred Stock shall
not be redeemable.
9. Ranking. The Series A Participating Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
10. Amendment. The Certificate of Incorporation and the By-Laws of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series A Participating Preferred Stock voting separately as a class.
11. Fractional Shares. Series A Participating 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 Series A Participating Preferred Stock.
A-6
IN WITNESS WHEREOF, the undersigned has executed this Certificate,
constituting the acknowledgement of the undersigned, under the penalties of
perjury, that this Certificate is the act and deed of the Corporation and that
the facts stated herein are true, as of this 9th day of August, 2001.
----------------------------------
Xxxx X. Xxxxxxxx
Vice President, Chief Financial
Officer and Secretary
A-7
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R-______________ _____________ Rights
NOT EXERCISABLE AFTER August 9, 2011, OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN
ACQUIRING PERSON OR AN ASSOCIATE OR AN AFFILIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID
UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*
Rights Certificate
FAIR, XXXXX AND COMPANY, INCORPORATED
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 August 9, 2001 (the "Rights Agreement") between FAIR,
XXXXX AND COMPANY, INCORPORATED, a Delaware corporation (the "Company"), and
MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(San Francisco time) on August 9, 2011, unless earlier redeemed or exchanged by
the Company as set forth in the Rights Agreement, at the office of the Rights
Agent designated for such purpose, one one-thousandth of a fully paid,
nonassessable share of Series A Participating Preferred Stock (the "Preferred
Stock") of the Company, at a purchase price of Two Hundred Forty Dollars
($240.00) per one one-thousandth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the appropriate Form
of Election to Purchase and Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number
of one one-thousandths of a share which may be purchased upon exercise thereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of the close of business on the record date relating to the
initial distribution of the Rights, based on the Preferred Stock as constituted
at such date.
------------------------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
Upon the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
Beneficially Owned (as such term is defined in the Rights Agreement) by (i) an
Acquiring Person (as such term is defined in the Rights Agreement) or an
Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement) or, (ii) under certain circumstances specified in the Rights
Agreement, a transferee of an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any rights with respect to such Rights from and after the occurrence
of any such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandths of a share of Preferred Stock or other securities which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of one one-thousandths of a share of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised (other than pursuant to Section 11(a)(ii) of the Rights Agreement) in
part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised. If this Rights Certificate shall be exercised in whole or in part
pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be
entitled to receive this Rights Certificate duly marked to indicate that such
exercise has occurred as set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may, in certain instances, be (i) redeemed by the Company at
its option at a redemption price of $0.001 per Right or (ii) exchanged in whole
or in part for shares of the Company's Common Stock or substitute consideration.
Subject to the provisions of the Rights Agreement, the Company, at its option,
may elect to mail payment of the redemption price to the registered holder of
the Rights at the time of redemption, in which event this certificate may become
void without any further action by the Company.
The Company may elect not to issue fractional shares of Preferred Stock or
other securities upon the exercise of any Right or Rights evidenced hereby
(other than fractions, in the instance of Preferred Stock, which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary
B-2
receipts), in which event a cash payment will be made, in lieu thereof, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of one one-thousandths
of a share of Preferred Stock 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated: ____________, 20__.
Attest: FAIR, XXXXX AND COMPANY, INCORPORATED
_________________________________ By: ___________________________________
Title:___________________________ Title:_________________________________
Countersigned:
MELLON INVESTOR SERVICES LLC,
as Rights Agent
By:______________________________
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
________________________________________________________________________________
(please print name, address and social security or other identifying number of
transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________, 20___.
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an Eligible Guarantor Institution, as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, 20__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the Certificate set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and will affix a legend to that effect on any
Rights Certificate issued in exchange for this Rights Certificate.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To: FAIR, XXXXX AND COMPANY, INCORPORATED
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or such other securities of the Company) issuable upon the exercise of the
Rights and requests that certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless the undersigned requests that the
Rights Certificate be registered in the name of and delivered to:
________________________________________________________________________________
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, 20__.
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an Eligible Guarantor Institution, as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); and
(3) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, 20__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the Certificate set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
B-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To: FAIR, XXXXX AND COMPANY, INCORPORATED
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the one one-thousandths of a
share of Preferred Stock (or such other securities of the Company or any other
Person) issuable upon the exercise of the Rights and requests that certificates
for such shares be issued in the name of:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If applicable, the Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to Section 11(a)(ii) of the
Rights Agreement shall be returned to the undersigned unless such Person
requests that the Rights Certificate be registered in the name of and delivered
to:
________________________________________________________________________________
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, 20__.
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an Eligible Guarantor Institution, as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-8
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement); and
(3) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ____________, 20__.
----------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the Certificate set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
B-9
EXHIBIT C
SUMMARY OF RIGHTS
On August 7, 2001, the Board of Directors of Fair, Xxxxx and Company,
Incorporated (the "Company") declared a dividend distribution of one "Right" for
each outstanding share of common stock (the "Common Stock") of the Company to
stockholders of record at the close of business on August 21, 2001 (the "Record
Date"). Except as set forth below, each Right, when exercisable, entitles the
registered holder to purchase from the Company one one-thousandth of a share of
a new series of preferred stock, designated as Series A Participating Preferred
Stock (the "Preferred Stock"), at a price of Two Hundred Forty Dollars ($240.00)
per one one-thousandth of a share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Mellon Investor Services LLC, as
"Rights Agent."
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earliest of the following: (i) a public
announcement that a person, entity or group of affiliated or associated persons
or entities (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of fifteen percent (15%) or more of the
outstanding shares of Common Stock (other than (A) as a result of repurchases of
stock by the Company or certain inadvertent actions by institutional or certain
other stockholders, (B) the Company, any subsidiary of the Company or any
employee benefit plan of the Company or any subsidiary and (C) certain other
instances set forth in the Rights Agreement); or (ii) ten (10) business days
(unless such date is extended by the Board of Directors) following the
commencement of a tender offer or exchange offer which would result in any
person, entity or group of affiliated or associated persons or entities becoming
an Acquiring Person (unless such tender offer or exchange offer is a Permitted
Offer (defined below)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights, if applicable), (i) the Rights will be evidenced by certificates for
Common Stock and will be transferred only with such Common Stock certificates,
(ii) new Common Stock certificates issued after the Record Date upon transfers
or new issuances of the Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates for outstanding Common Stock will also constitute the transfer of
the Rights associated with such Common Stock. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable unless and until a Distribution Date occurs.
The Rights will expire on the earliest of (i) August 9, 2011, (ii) consummation
of a merger transaction with a person, entity or group who (x) acquired Common
Stock pursuant to a Permitted Offer and (y) is offering in the merger the same
price per share and form of consideration paid in the Permitted Offer or (iii)
redemption or exchange of the Rights by the Company as described below.
C-1
The number of Rights associated with each share of Common Stock shall be
proportionately adjusted in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Stock. The Purchase Price
payable, and the number of one one-thousandths of a share of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights, options or
warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings) or of subscription rights, options or
warrants (other than those referred to above). With certain exceptions, no
adjustments in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least one percent (1%) in such Purchase Price.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or fifty percent (50%)
or more of the Company's assets or earning power are sold (in one transaction or
a series of transactions), proper provision shall be made so that each holder of
a Right (other than an Acquiring Person) shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price, that
number of shares of common stock of either the Company, in the event that it is
the surviving corporation of a merger or consolidation, or the acquiring company
(or, in the event there is more than one acquiring company, the acquiring
company receiving the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have a market value of
two (2) times the Purchase Price (such right being called the "Merger Right").
In the event that a person, entity or group becomes an Acquiring Person (unless
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock at a price and on terms determined prior to the date of the first
acceptance of payment for any of such shares by at least a majority of the
members of the Board of Directors who are not officers of the Company and are
not Acquiring Persons (or affiliated or associated persons or entities thereof)
to be fair to, and in the best interests of, the Company and its stockholders (a
"Permitted Offer")), then proper provision shall be made so that each holder of
a Right will, for a sixty (60) day period (subject to extension under certain
circumstances) thereafter, have the right to receive upon exercise that number
of shares of Common Stock (or, at the election of the Company, which election
may be obligatory if sufficient authorized shares of Common Stock are not
available, a combination of Common Stock, property, other securities (e.g.,
Preferred Stock) or cash (including by way of a reduction in the Purchase
Price)) having a market value of two (2) times the Purchase Price (such right
being called the "Subscription Right"). The holder of a Right will continue to
have the Merger Right whether or not such holder exercises the Subscription
Right. Notwithstanding the foregoing, upon the occurrence of any of the events
giving rise to the exercisability of the Merger Right or the Subscription Right,
any Rights that are or were at any time after the Distribution Date owned by an
Acquiring Person (or affiliated or associated persons or entities thereof) shall
immediately become null and void.
C-2
At any time prior to the earlier to occur of (i) a person, entity or group
becoming an Acquiring Person or (ii) the expiration of the Rights, the Company
may redeem the Rights in whole, but not in part, at a price of $0.001 per Right
(the "Redemption Price"), which redemption shall be effective upon the action of
the Board of Directors. Additionally, the Company may, following a person,
entity or group becoming an Acquiring Person, redeem the then outstanding Rights
in whole, but not in part, at the Redemption Price (i) if such redemption is
incidental to a merger or other business combination transaction or series of
transactions involving the Company but not involving an Acquiring Person (or
certain related persons or entities) or (ii) following an event giving rise to,
and the expiration of the exercise period for, the Subscription Right if and for
as long as the Acquiring Person triggering the Subscription Right beneficially
owns securities representing less than fifteen percent (15%) of the outstanding
shares of Common Stock and at the time of redemption there are no other
Acquiring Persons. The redemption of Rights described in the preceding sentence
shall be effective only as of such time when the Subscription Right is not
exercisable. Upon the effective date of the redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Subject to applicable law, the Board of Directors, at its option, may at
any time after a person, group or entity becomes an Acquiring Person (but not
after the acquisition by such Acquiring Person of fifty percent (50%) or more of
the outstanding shares of Common Stock), exchange all or part of the then
outstanding and exercisable Rights (except for Rights which have become void)
for shares of Common Stock at a rate of one share of Common Stock per Right
(subject to adjustment) or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 1,000 times the dividend declared on each share of Common Stock, but in no
event less than $25.00. In the event of liquidation, the holders of shares of
Preferred Stock will receive a preferred liquidation payment equal, per share,
to the greater of $1,000.00 or 1,000 times the payment made per share of Common
Stock. Each share of Preferred Stock will have 1,000 votes, voting together with
the shares of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount and type of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions. Fractional
shares of Preferred Stock will be issuable; however, the Company may elect to
(i) distribute depositary receipts in lieu of such fractional shares and (ii)
make an adjustment in cash, in lieu of fractional shares other than fractions
that are multiples of one one-thousandth of a share, based on the market price
of the Preferred Stock prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights should not
be taxable to stockholders or to the Company, holders of Rights may, depending
upon the circumstances, recognize taxable income in the event (i) that the
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Rights become exercisable for (x) Common Stock or Preferred Stock (or other
consideration) or (y) common stock of an acquiring company in the instance of
the Merger Right as set forth above or (ii) of any redemption or exchange of the
Rights as set forth above.
The Company and the Rights Agent retain broad authority to amend the Rights
Agreement; however, following any Distribution Date any amendment may not
adversely affect the interests of holders of Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. THIS
SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE.
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