Exhibit 4.1
RIGHTS AGREEMENT
dated as of
May 16, 2002
between
STRATUS PROPERTIES INC.
and
MELLON INVESTOR SERVICES LLC,
as Rights Agent
TABLE OF CONTENTS
Section 1. Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Right Certificates. 5
Section 4. Form of Right Certificates 7
Section 5. Countersignature and Registration. 7
Section 6. Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. 8
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. 8
Section 8. Cancellation and Destruction of Right Certificates
10
Section 9. Reservation and Availability of Capital Stock. 10
Section 10. Preferred Stock Record Date 11
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. 12
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 19
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. 20
Section 14. Fractional Rights and Fractional Shares. 22
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 24
Section 17. Right Certificate Holder Not Deemed a Stockholder
25
Section 18. Concerning the Rights Agent. 25
Section 19. Merger or Consolidation or Change of Name of
Rights Agents. 26
Section 20. Duties of Rights Agent 27
Section 21. Change of Rights Agent 29
Section 22. Issuance of New Right Certificates 30
Section 23. Redemption. 30
Section 24. Exchange. 30
Section 25. Notice of Proposed Actions. 31
Section 26. Notices 32
Section 27. Supplements and Amendments 33
Section 28. Successors 33
Section 29. Determinations and Actions by the Board, etc 33
Section 30. Benefits of this Agreement 34
Section 31. Severability 34
Section 32. Governing Law 34
Section 33. Counterparts 34
Section 34. Descriptive Headings 35
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement"), dated as of May
16, 2002, is by and between Stratus Properties Inc., a Delaware
corporation (the "Company"), and Mellon Investor Services LLC, a
New Jersey limited liability company, as Rights Agent (the
"Rights Agent"),
W I T N E S S E T H
WHEREAS, on May 16, 2002, the Board of Directors of the
Company authorized and declared a dividend of one preferred stock
purchase right (a "Right") for each share of Common Stock (as
hereinafter defined) outstanding at the Close of Business on May
29, 2002 (the "Record Date"), and has authorized the issuance,
upon the terms and subject to the conditions hereinafter set
forth, of one Right (subject to adjustment) in respect of each
share of Common Stock issued after the Record Date, each Right
representing the right to purchase, upon the terms and subject to
the conditions hereinafter set forth, one one-hundredth (subject
to adjustment) of a share of Preferred Stock (as hereinafter
defined);
NOW, THEREFORE, the parties hereto agree as follows:
Definitions. The following terms, as used herein, have the
following meanings:
"Acquiring Person" means any Person who, together with all
Affiliates and Associates of such Person, is the Beneficial Owner
of the Threshold Percentage, but shall not include an Exempt
Person; provided, however, that (a) if the Board determines in
good faith that a Person who would otherwise be an "Acquiring
Person" has become the Beneficial Owner of a number of shares of
Common Stock such that the Person would otherwise qualify as an
"Acquiring Person" inadvertently (including, without limitation,
because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person
to be an "Acquiring Person" or (ii) such Person was aware of the
extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership
under this Agreement) and without any intention of changing,
exercising or influencing control of the Company, then such
Person shall not be deemed to be or to have become an "Acquiring
Person" for any purposes of this Agreement unless and until such
Person shall have failed to divest itself, as soon as practicable
(as determined, in good faith, by the Board of Directors of the
Company), of Beneficial Ownership of a sufficient number of
shares of Common Stock so that such Person would no longer
otherwise qualify as an "Acquiring Person;" and (b) no Person
shall become an "Acquiring Person" as the result of any
acquisition of shares of Common Stock by the Company which, by
reducing the number of shares of Common Stock outstanding,
increases the proportionate number of shares of Common Stock
beneficially owned by such Person to the Threshold Percentage;
provided, however, that if a Person shall become the Beneficial
Owner of the Threshold Percentage by reason of such share
acquisition by the Company and shall thereafter become the
Beneficial Owner of any additional shares of Common Stock (other
than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), then such Person
shall be deemed to be an "Acquiring Person" unless upon becoming
the Beneficial Owner of such additional shares of Common Stock
such Person does not beneficially own the Threshold Percentage.
"Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in
effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to have "Beneficial Ownership" of and to
"beneficially own," any securities:
(a) that such Person or any of its Affiliates or
Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act as in
effect on the date hereof);
(b) that such Person or any of its Affiliates or
Associates, directly or indirectly, has
(i) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a
bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", (A)
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase, (B) securities that such Person has a right to acquire
upon the exercise of Rights at any time prior to the time that
any Person becomes an Acquiring Person or (C) securities issuable
upon the exercise of Rights from and after the time that any
Person becomes an Acquiring Person if such Rights were acquired
by such Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof ("Original Rights") or pursuant to Section
11(i) or Section 11(p) with respect to an adjustment to Original
Rights; or
(ii) the right to vote (whether such right is
exercisable immediately or only upon the occurrence of certain
events or the passage of time or both) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or
otherwise; provided that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", any security
under this clause (ii) as a result of an agreement, arrangement
or understanding to vote such security if such agreement,
arrangement or understanding (A) arises solely from a revocable
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proxy or consent given in response to a public proxy or consent
solicitation made pursuant to the applicable rules and
regulations under the Exchange Act and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(c) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) and with respect to which such Person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy or consent
as described in subparagraph (b)(ii) immediately above) or
disposing of any such securities;
provided, however, that no Person who is an officer, director or
employee of an Exempt Person shall be deemed, solely by reason of
such Person's status or authority as such, to be the "Beneficial
Owner" of, to have "Beneficial Ownership" of or to "beneficially
own" any securities that are "beneficially owned," including,
without limitation, in a fiduciary capacity, by an Exempt Person
or by any other such officer, director or employee of an Exempt
Person.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in the States of New
Jersey or Texas are authorized or obligated by law or executive
order to close.
"Close of Business" on any given date means 5:00 P.M.,
Central time, on such date; provided that if such date is not a
Business Day "Close of Business" means 5:00 P.M., Central time,
on the next succeeding Business Day.
"Common Stock" means the Common Stock, par value $0.01 per
share, of the Company, except that, when used with reference to
any Person other than the Company, "Common Stock" means the
capital stock of such Person with the greatest voting power, or
the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Company Voting Stock" means any capital stock of the
Company which is then entitled to vote for the election of
directors.
"Distribution Date" means the earlier of (a) the Close of
Business on the tenth day after the Stock Acquisition Date and
(b) the Close of Business on the tenth Business Day (or such
later day as may be designated prior to the occurrence of a
Section 11(a)(ii) Event by action of the Board) after the date of
the commencement of a tender or exchange offer by any Person if,
upon consummation thereof, such Person would be an Acquiring
Person; provided, however, that if either of such dates occurs
after the date of this Agreement and on or prior to the Record
Date, then the Distribution Date shall be the Record Date.
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"Exempt Person" shall mean the Company or any Subsidiary of
the Company, in each case including, without limitation, in its
fiduciary capacity, or any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity or trustee
holding Common Stock for or pursuant to the terms of any such
plan or for the purpose of funding any such plan or funding other
employee benefits for employees of the Company or of any
Subsidiary of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means the earlier of (a) the Final
Expiration Date and (b) the time at which all Rights are redeemed
as provided in Section 23 or exchanged as provided in Section 24.
"Final Expiration Date" means the Close of Business on May
29, 2012.
"Majority Shares" means the number of shares of Company
Voting Stock as will elect a majority of the directors of the
Company.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or
organization.
"Preferred Stock" means the Series C Participating
Cumulative Preferred Stock, par value $0.01 per share, of the
Company, having the terms set forth in the form of certificate of
designations attached hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as
provided herein) at which a holder of a Right may purchase one
one-hundredth of a share of Preferred Stock (subject to
adjustment as provided herein) (or, in accordance with Section
11(a)(ii), may purchase the Adjustment Shares (as defined
therein)) upon exercise of a Right, which price shall initially
be $40.00.
"Section 11(a)(ii) Event" means any event described in the
first clause of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x),
(y) or (z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as
amended.
"Stock Acquisition Date" means the date of the first public
announcement (including through the filing of a report on
Schedule 13D under the Exchange Act (or any comparable or
successor report)) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting
power, in the absence of contingencies, to elect a majority of
the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such
first Person.
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"Threshold Percentage", as of any date of determination,
means 20% of all then-outstanding Common Stock.
"Trading Day" means a day on which the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a
Business Day.
"Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2 Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company 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 (each, a "Co-Rights Agent") as it may deem necessary or
desirable. If the Company appoints one or more Co-Rights Agents,
the respective duties of the Rights Agent and any Co-Rights
Agents shall be as the Company shall determine, and references
herein to the "Rights Agent" shall be deemed to refer to the
Rights Agent and/or the Co-Rights Agent, as applicable. The
Rights Agent shall have no duty to supervise, and in no event
shall be liable for, the acts or omissions of any such Co-Rights
Agent.
Section 3 Issue of Right Certificates.
(a) Prior to the Distribution Date, the Rights will be
evidenced (subject to the next to the last sentence of this
Section 3(a)) by the certificates for the Common Stock and not by
separate Right Certificates (as hereinafter defined) and the
registered holders of the Common Stock shall be deemed to be the
registered holders of the associated Rights, and the Rights will
be transferable only in connection with the transfer of the
underlying shares of Common Stock. As soon as practicable after
the Record Date, the Company will provide a copy of the Summary
of Rights substantially in the form of Exhibit C hereto, either
by first-class mail, postage prepaid, or otherwise in conformity
with applicable law, 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 Common Stock outstanding as of the Record Date,
prior to the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof
with or without a copy of the Summary of Rights. Prior to the
Distribution Date (or, if earlier, the Expiration Date), the
surrender for transfer of any certificate for Common Stock
outstanding on the Record Date, with or without a copy of the
Summary of Rights, shall also constitute the transfer of the
Rights associated with the Common Stock represented thereby.
(b) As soon as practicable after the Company has notified
the Rights Agent of the occurrence of the Distribution Date and
has provided the Rights Agent with a list of the holders of the
Company's Common Stock, the Rights Agent will send, by
5
first-class, insured mail, postage prepaid, to each record holder
of the Common Stock as of the Close of Business on the
Distribution Date (other than any Acquiring Person or any
Affiliate or Associate thereof), at the address of such holder
shown on the records of the Company, one or more Right
Certificates evidencing one Right (subject to adjustment as
provided herein) for each share of Common Stock so held. If an
adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11 the Company shall, at the time
of distribution of the Right Certificates, make the necessary and
appropriate rounding adjustments (in accordance with Section
14(a)) so that Right Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any
fractional Rights. From and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of
Common Stock outstanding as of the Record Date or issued (on
original issuance or out of treasury) after the Record Date but
prior to the earlier of the Distribution Date and the Expiration
Date. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior
to the Expiration Date, the Company shall, with respect to shares
of Common Stock so issued or sold (x) pursuant to the exercise of
stock options or under any employee plan or arrangement or (y)
upon the exercise, conversion or exchange of other securities
issued by the Company prior to the Distribution Date and may, in
any other case, if deemed necessary or appropriate by the Board,
issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided that no
such Right Certificate shall be issued if, and to the extent
that, (i) the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right
Certificate would be issued or (ii) appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Certificates issued for Common Stock after the Record
Date but prior to the earlier of the Distribution Date and the
Expiration Date shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
This certificate also evidences certain Rights as set
forth in a Rights Agreement between Stratus Properties
Inc. and Mellon Investor Services, LLC, dated as of May
16, 2002, and as amended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at
the principal executive offices of the Company. The
Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this
certificate, may be redeemed or exchanged or may
expire. As set forth in the Rights Agreement, Rights
issued to or held by any Person who is, was or becomes
an Acquiring Person or an Affiliate or Associate
6
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may be null
and void.
Section 4 Form of Right Certificates. The certificates
evidencing the Rights (and the forms of assignment, election to
purchase and certificates to be printed on the reverse thereof)
(the "Right Certificates") shall be substantially in the form of
Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement and which do not affect the
rights, duties or responsibilities of the Rights Agent, or as may be
required to comply with any applicable law, rule or regulation or
with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The Right
Certificates, whenever distributed, shall be dated as of the
Record Date.
Section 5 Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chief Executive Officer, its President, any
Executive Vice President or any Senior 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 Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company whose manual or facsimile
signature is affixed to the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right
Certificates may, nevertheless, be countersigned by the Rights
Agent and issued and delivered with the same force and effect as
though the Person who signed such Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate
may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be
a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement
any such Person was not such an officer.
(b) Following the Distribution Date and receipt by the
Rights Agent of all relevant information, the Rights Agent will
keep or cause to be kept, at its office designated as the place
for surrender of Right Certificates upon exercise, transfer or
exchange, books for registration and transfer of the Right
Certificates. Such books shall show with respect to each Right
Certificate the name and address of the registered holder
thereof, the number of Rights indicated on the certificate and
the certificate number.
Section 6. Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.
7
(a) At any time after the Distribution Date and prior to
the Expiration Date, any Right Certificate or Certificates may,
upon the terms and subject to the conditions set forth in this
Agreement, be transferred or exchanged for another Right
Certificate or Certificates evidencing a like number of Rights as
the Right Certificate or Certificates surrendered. Any
registered holder desiring to transfer or exchange any Right
Certificate or Certificates shall surrender such Right
Certificate or Certificates (with, in the case of a transfer, the
form of assignment and certificate on the reverse side thereof
duly executed) to the Rights Agent at the office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate
or Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(e). Upon
satisfaction of the foregoing requirements, the Rights Agent
shall, subject to Sections 7(d), 14 and 24, countersign and
deliver to the Person entitled thereto a Right Certificate or
Certificates as so requested. The Company may require payment of
a sum sufficient to cover any transfer tax or other governmental
charge that may be imposed in connection with any transfer or
exchange of any Right Certificate or Certificates. The Rights
Agent shall have no duty or obligation under this Section 6
unless and until it is satisfied that all such taxes and/or
charges have been paid in full.
(b) Upon receipt by the Company and the Rights Agent of
evidence satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and,
at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will issue and deliver a
new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein, including Sections 7(d), 7(e), 9(c), 11(a), 23
and 24) in whole or in part at any time after the Distribution
Date and prior to the Expiration Date upon surrender of the Right
Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly and properly
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment (in lawful
money of the United States of America by certified check or bank
draft payable to the order of the Company) of the aggregate
Purchase Price with respect to the Rights then to be exercised
and an amount equal to any applicable transfer tax or other
governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a)
and subject to Section 20(k), the Rights Agent shall thereupon
promptly requisition from any transfer agent of the Preferred
Stock (or make available, if the Rights Agent is the transfer
8
agent therefor) certificates for the total number of one
one-hundredths 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 if the Company shall have
elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights with a depositary agent, requisition from
the depositary agent depositary receipts representing interests
in such number of one one-hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such
request, requisition from the Company the amount of cash, if
any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14 and after receipt of such
certificates or depositary receipts and cash, if any, cause the
same to be delivered to or upon the order of the registered
holder of such Right Certificate (with such certificates or
receipts registered in such name or names as may be designated by
such holder). If the Company is obligated to deliver Common
Stock, other securities or assets pursuant to this Agreement, the
Company will make all arrangements necessary so that such other
securities and assets are available for delivery by the Rights
Agent, if and when necessary to comply with this Agreement.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing the number of Rights remaining
unexercised shall be issued by the Rights Agent and delivered to,
or upon the order of, the registered holder of such Right
Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Sections
6 and 14.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes such or a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate
or Affiliate) to holders of equity interests in such Acquiring
Person (or in any such Associate or Affiliate) or to any Person
with whom the Acquiring Person (or any such Associate or
Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or a transfer
which is part of a plan, arrangement or understanding which has
as a primary purpose or effect the avoidance of this Section 7(d)
shall become null and void without any further action, and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall notify the Rights
Agent when this Section 7(d) applies and shall use all reasonable
efforts to insure that the provisions of this Section 7(d) are
complied with, but neither the Company nor the Rights Agent shall
have any liability to any holder of Right Certificates or other
9
Person as a result of the Company's failure to make any
determinations with respect to an Acquiring Person or its
Affiliates and Associates or any transferee of any of them
hereunder.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported transfer
pursuant to Section 6 or exercise pursuant to this Section 7
unless such registered holder shall have properly and duly
completed and signed the certificate contained in the form of
assignment or election to purchase, as the case may be, set forth
on the reverse side of the Right Certificate surrendered for such
transfer or exercise, as the case may be, shall not have
indicated an affirmative response to clause 1 or 2 thereof and
shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for exercise, transfer or
exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by this Agreement. The
Company shall deliver to the Rights Agent for cancellation, and
the Rights Agent shall cancel, any other Right Certificate
purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled
Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available a number of shares of Preferred
Stock that are authorized but not outstanding or otherwise
reserved for issuance sufficient to permit the exercise in full
of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all
securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to file, as
soon as practicable following the earliest date after the
occurrence of a Section 11(a)(ii) Event as of which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii),
or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the
Rights, to cause such registration statement to become effective
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as soon as practicable after such filing and to cause such
registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until
the earlier of the date as of which the Rights are no longer
exercisable for such securities and the Expiration Date. The
Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or blue sky laws of
the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of
time not to exceed 90 days after the date set forth in Section
9(c)(i), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall promptly
notify the Rights Agent thereof and issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement (with
prompt notice thereof to the Rights Agent) at such time as the
suspension is no longer in effect. Notwithstanding any such
provision of this Agreement to the contrary, the Rights shall not
be exercisable for securities in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, such exercise therefor shall not be permitted under
applicable law or a registration statement in respect of such
securities shall not have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all one
one-hundredths of a share of Preferred Stock issuable upon
exercise of Rights shall, at the time of delivery of the
certificates for such securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all taxes and other governmental
charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates for
Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax or other
governmental charge that may be payable in respect of any
transfer involved in the issuance or delivery of any Right
Certificates or of any certificates for Preferred Stock to a
Person other than the registered holder of the applicable Right
Certificate, and prior to any such transfer, issuance or delivery
any such tax or other governmental charge shall have been paid by
the holder of such Right Certificate or it shall have been
established to the Company's satisfaction that no such tax or
other governmental charge is due.
Section 10. Preferred Stock Record Date. Each Person (other
than the Company) in whose name any certificate for Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of such Preferred Stock represented
thereby on, and such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any transfer taxes or other
governmental charges) was made; provided that if the date of such
surrender and payment is a date upon which the transfer books of
the Company relating to the Preferred Stock are closed, such
Person shall be deemed to have become the record holder of such
11
shares on, and such certificate shall be dated, the next
succeeding Business Day on which the applicable transfer books of
the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable,
including the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not
be entitled to receive any notice of any proceedings of the
Company except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.
(a) (i) If the Company shall at any time after the date of
this Agreement pay a dividend on the Preferred Stock payable in
shares of Preferred Stock, subdivide the outstanding Preferred
Stock into a greater number of shares, combine the outstanding
Preferred Stock into a smaller number of shares or 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 involving the Company),
the Purchase Price in effect immediately prior to the record date
for such dividend or the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of Preferred Stock or other capital stock issuable on such
date shall be proportionately adjusted so that each holder of a
Right shall (except as otherwise provided herein, including
Section 7(d)) thereafter be entitled to receive, upon exercise
thereof at the Purchase Price in effect immediately prior to such
date, the aggregate number and kind of shares of Preferred Stock
or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time
when the applicable transfer books of the Company were open, such
holder would have been entitled to receive upon such exercise and
by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs that requires an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its
Affiliates and Associates, shall, at any time after the date of
this Agreement, become an Acquiring Person, then each holder of a
Right shall (except as otherwise provided herein, including
Section 7(d)) thereafter be entitled to receive, upon exercise
thereof at the Purchase Price in effect immediately prior to the
first occurrence of a Section 11(a)(ii) Event, in lieu of
Preferred Stock, such number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (such shares
being referred to herein as the "Adjustment Shares") as shall be
equal to the result obtained by dividing
(x) the product obtained by multiplying the Purchase
Price in effect immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable
12
immediately prior to such first occurrence (such product being
thereafter referred to as the "Purchase Price" for each Right) by
(y) 50% of the current market price (determined
pursuant to Section 11(d)(i)) per share of Common Stock on the
date of such first occurrence;
provided, however, that the Purchase Price (as so adjusted
pursuant this clause (ii) and the number of Adjustment Shares so
receivable upon exercise of a Right shall, following the
occurrence of such Section 11(a)(ii) Event, be subject to further
adjustment as appropriate in accordance with Section 11(f). From
and after the occurrence of a Section 13 Event, any Rights that
theretofore have not been exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only in accordance with
Section 13 and not pursuant to this Section 11(a)(ii).
(iii) If the number of shares of Common Stock that
are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance other than upon exercise
of the Rights is not sufficient to permit the exercise in full of
the Rights in accordance with Section 11(a)(ii), the Company
shall, with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the
Purchase Price then in effect, (to the extent available) shares
of Common Stock and then, (to the extent available) such number
of one one-hundredths of a share of Preferred Stock as are then
equivalent in value to the value of the Adjustment Shares, and
then, if necessary, other equity or debt securities of the
Company, cash or other assets, a reduction in the Purchase Price
or any combination of the foregoing, having an aggregate value
(based upon the advice of a nationally recognized investment
banking firm) equal to the value of the Adjustment Shares;
provided that (x) the Company may, and (y) if the Company shall
not have made adequate provision as required above to deliver
value within 30 days following the first occurrence of a Section
11(a)(ii) Event (the "Substitution Period"), then the Company
shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price, (to
the extent available) shares of Common Stock, and then (to the
extent available) one-hundredths of a share of Preferred Stock
and then, if necessary, other equity or debt securities of the
Company, cash or other assets or any combination of the
foregoing, having an aggregate value (based upon the advice of a
nationally recognized investment banking firm) equal to the
excess of the value of the Adjustment Shares over the Purchase
Price. To the extent that the Company determines that some
action is required to be taken pursuant to the preceding
sentence, the Company (x) shall provide, subject to Section 7(d),
that such action shall apply uniformly to all outstanding Rights
and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to decide the
appropriate form and value of any consideration to be delivered
as referred to in the preceding sentence. If any such suspension
occurs, 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, as
well as a public announcement (with prompt notice thereof to the
Rights Agent) at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of
Common Stock shall be the current market price per share of such
13
Common Stock (as determined pursuant to Section 11(d)) on the
date of the first occurrence of a Section 11(a)(ii) Event; any
common stock equivalent shall be deemed to have the same value as
the Common Stock on such date; and the value of other securities
or assets shall be determined pursuant to Section 11(d)(iii).
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for
a period expiring within 45 calendar days after such record date)
Preferred Stock (or securities having the same rights, privileges
and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into or exercisable
for Preferred Stock (or equivalent preferred stock) at a price
per share of Preferred Stock (or equivalent preferred stock) (in
each case, taking account of any conversion or exercise price)
less than the current market price (as determined pursuant to
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 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 that the aggregate price (taking account of any
conversion or exercise price) of the total number of shares of
Preferred Stock (and/or equivalent preferred stock) 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) so to be offered. In case such subscription price may be
paid by delivery of consideration part or all of which shall be
in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and
shall be 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 if such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase
Price that would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Preferred Stock
(including any such distribution made in connection with a
consolidation or merger involving the Company) of evidences of
indebtedness, equity securities other than Preferred Stock,
assets (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company) or rights, options
or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as
determined pursuant to Section 11(d)) per share of Preferred
Stock on such record date, less the value (as determined pursuant
to Section 11(d)(iii)) of such evidences of indebtedness, equity
securities, assets, rights, options or warrants so to be
14
distributed with respect to one share of Preferred Stock and the
denominator of which shall be such current market price per share
of Preferred Stock. Such adjustment shall be made successively
whenever such a record date is fixed, and if such distribution is
not so made, the Purchase Price shall be adjusted to be the
Purchase Price that would then be in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder other
than computations made pursuant to Section 11(a)(iii) or 14, 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 30 consecutive Trading Days
ending on the last Trading Day immediately prior to such date;
for purposes of computations made pursuant to Section 11(a)(iii),
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 10 consecutive Trading Days
immediately following such date; and for purposes of computations
made pursuant to Section 14, the "current market price" per share
of Common Stock for any Trading Day shall be deemed to be the
closing price per share of such Common Stock for such Trading
Day; provided that if the current market price per share of such
Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of a dividend or
distribution on such Common Stock payable in shares of such
Common Stock or securities exercisable for or convertible into
shares of such Common Stock (other than the Rights), or any
subdivision, combination or reclassification of such Common
Stock, and prior to the expiration of the requisite 30 Trading
Day or 10 Trading Day period, as set forth above, 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 Nasdaq or, if such shares of Common Stock are not
listed or admitted to trading on Nasdaq, on the principal
national securities exchange on which such shares of Common Stock
are listed or admitted to trading or, if such shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or such
other system then in use or, if on any such date such 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 such Common Stock
selected by the Board. If on any such date no market maker is
making a market in such Common Stock, the fair value of such
shares on such date as determined in good faith by the Board (or,
if at the time of such determination there is an Acquiring
Person, by a nationally recognized investment banking firm) shall
be used. If the Common Stock is not publicly held or not so
listed or traded, the "current market price" per share of such
15
Common Stock means the fair value per share as determined in good
faith by the Board, or, if at the time of such determination
there is an Acquiring Person, by a nationally recognized
investment banking firm, which determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per 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 of Preferred Stock cannot
be determined in such manner, the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the current
market price per share of the Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last sentence
thereof)). If neither the Common Stock nor the Preferred Stock
is publicly held or so listed or traded, the "current market
price" per share of the Preferred Stock shall be determined in
the same manner as set forth in the last sentence of Section
11(d)(i). For all purposes of this Agreement, the "current
market price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of
Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder,
the value of any securities or assets other than Common Stock or
Preferred Stock shall be the fair value as determined in good
faith by the Board, or, if at the time of such determination
there is an Acquiring Person, by a nationally recognized
investment banking firm which 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 1%
in the Purchase Price; provided that any adjustments that by
reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a), the holder of any
Right shall be entitled to receive upon exercise of such Right
any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Section 11(a), 11(b),
11(c), 11(e), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(m), and
16
the provisions of Sections 7, 9, 10, 13 and 14 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 hereunder shall evidence the right to
purchase, at the Purchase Price then in effect, the then
applicable number of one one-hundredths of a share of Preferred
Stock and other capital stock of the Company issuable 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) upon each adjustment of the Purchase
price as a result of the calculations made in Section 11(b) and
11(c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-hundredths
of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by multiplying (x) the number of one
one-hundredths of a share for which a Right was exercisable
immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price
and dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-hundredths of
a share of Preferred Stock issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which such Right
was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement 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 Right
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
17
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price)
and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-hundredth of a share
and the number of shares that were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of the
number of one one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths of
a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
(and shall promptly notify the Rights Agent of any such election)
until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the number of one
one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise over
and above the number of one one-hundredths of a share of
Preferred Stock or other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided 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 in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it, in its sole discretion, shall determine to be
advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock
at less than the current market price, issuance wholly for cash
of Preferred Stock or securities which by their terms are
convertible into or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to the holders
of its Preferred Stock, shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it will not at
any time after the Distribution Date consolidate, merge or
otherwise combine with or sell or otherwise transfer (and/or
18
permit any of its Subsidiaries to sell or otherwise transfer), in
one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries, taken as a whole, to
any other Person or Persons if (x) at the time of or immediately
after such consolidation, merger, combination or sale there are
any rights, warrants or other instruments or securities
outstanding or any agreements or arrangements in effect that
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation,
merger, combination or sale, the stockholders of a Person who
constitutes, or would constitute, the "Principal Party" for the
purposes of Section 13 shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that after the
Distribution Date, it will not, except as permitted by Sections
23, 24 and 27, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable
that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, if at any time after the date hereof and prior to the
Distribution Date the Company shall (i) pay a dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock into a larger
number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or
delivered thereafter as contemplated by Section 3(c), 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.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or
13, the Company shall promptly prepare a certificate setting
forth such adjustment and a brief, reasonably detailed, statement
of the facts and computations for such adjustment, 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 mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing affected shares of Common
Stock) in the manner set forth in Section 26. 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 such
19
adjustment unless and until it shall have received such a
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If, following the occurrence of a Section 11(a)(ii)
Event, directly or indirectly,
(x) the Company shall consolidate with, merge into, or
otherwise combine with, any other Person, and the Company shall
not be the continuing or surviving corporation of such
consolidation, merger or combination,
(y) any Person shall merge into, or otherwise combine
with, the Company, and the Company shall be the continuing or
surviving corporation of such merger or combination and, in
connection with such merger or combination, all or part of the
outstanding shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Company or any
other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries
shall sell or otherwise transfer, in one transaction or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons,
then, and in each such case, proper provision shall promptly be
made so that
(i) each holder of a Right shall thereafter be entitled to
receive, upon exercise thereof at the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, such number of duly authorized, validly issued, fully paid
and nonassessable shares of freely tradeable Common Stock of the
Principal Party (as hereinafter defined), not subject to any
rights of call or first refusal, liens, encumbrances or other
claims, as shall be equal to the result obtained by dividing
(A) the product obtained by multiplying the Purchase
Price in effect immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence (such product being
thereafter referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by
(B) 50% of the current market price (determined
pursuant to Section 11(d)(i)) per share of the Common Stock of
such Principal Party on the date of consummation of such
consolidation, merger, combination, sale or transfer;
20
provided, however, that the Purchase Price (as so adjusted
pursuant to the foregoing clause (i)(A)) and the number of shares
of Common Stock of such Principal Party so receivable upon
exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) to reflect any
events occurring in respect of the Common Stock of such Principal
Party after the occurrence of such consolidation, merger, sale or
transfer;
(ii) the Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger,
combination, 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 shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and
(iv) such Principal Party shall take such steps
(including the authorization and reservation of a sufficient
number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) in
connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock thereafter deliverable
upon the exercise of the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in Section
13(a)(x) or (y), the Person that is the issuer of any securities
into which shares of Common Stock are converted in such merger,
consolidation or combination, and if no securities are so issued,
the Person that survives or results from such merger,
consolidation or combination; and
(ii) in the case of any transaction described in
Section 13(a)(z), the Person that is the party receiving the
greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided that in any such case, if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person;
and in case such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Stocks 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.
(c) The Company shall not consummate any such consolidation,
merger, combination, sale or transfer unless the Principal Party
shall have a sufficient number of authorized shares of its Common
21
Stock which are not outstanding or otherwise reserved for
issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in Section 13(a) and 13(b) and providing
that, as soon as practicable after the date of any consolidation,
merger, combination, sale or transfer mentioned in Section 13(a),
the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the securities issuable upon
exercise of the Rights, and will use its best efforts to cause
such registration statement (A) to become effective as soon as
practicable after such filing and (B) to remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
Section 11(p), or to distribute Right Certificates that evidence
fractional Rights. In lieu of fractional Rights, the Company
shall pay to the registered holders of the Right Certificates
with regard to which fractional Rights otherwise would be
issuable an amount in cash equal to the same fraction of the
current market price of a whole Right. For purposes of this
Section 14(a), the current market price of a whole Right shall be
the closing price of a Right for the Trading Day immediately
prior to the date on which such fractional Rights would otherwise
have been issuable. The closing price of a Right for any day
shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on Nasdaq or, if the
Rights are not listed or admitted to trading on Nasdaq, on the
principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System 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 current market price of the Rights on
such date shall be as determined in good faith by the Board, or,
22
if at the time of such determination there is an Acquiring
Person, by a nationally recognized investment banking firm.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral
multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Preferred Stock (other than
fractions that are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of any such fractional shares
of Preferred Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a
share of Preferred Stock. For purposes of this Section 14(b),
the current market price of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth of the closing price
of a share of Preferred Stock (as determined pursuant to Section
11(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or
upon any exchange pursuant to Section 24, the Company shall not
be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates that
evidence fractional shares of such Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the current market price of a share
of Common Stock. For purposes of this Section 14(c), the current
market price of a share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise of a Right except as
permitted by this Section 14.
(e) Whenever a payment for fractional Rights or fractional
shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate
setting forth in reasonable detail the facts related to such
payment 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.
23
Section 15. Rights of Action.
(a) All rights of action in respect of this Agreement
are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered
holders of certificates representing Common Stock); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of any certificate representing Common Stock),
without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of
any certificate representing Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any
Person subject to, this Agreement.
(b) 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
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, judgment, decree or ruling (whether interlocutory or
final) issued by a court or by a governmental, regulatory, self-
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 all reasonable efforts to have any such
injunction, order, judgment, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates fully
executed;
(c) subject to Sections 6 and 7, the Company and the Rights
Agent may deem and treat the Person in whose name a Right
Certificate (or, prior to the Distribution Date, a certificate
representing shares of Common Stock) is registered as the
absolute owner thereof and of the Rights evidenced thereby
24
(notwithstanding any notations of ownership or writing on the
Right Certificate or the certificate representing shares of
Common Stock made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(d),
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
its inability to perform any of its 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 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.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder
of the shares of capital stock that may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the provisions hereof.
Section 18. Concerning the Rights Agent.
(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, execution,
administration and amendment 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 (including, without
limitation, the reasonable fees and expenses of legal counsel),
incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, (as finally
determined by 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 or the
exercise or performance of its duties hereunder, including the
costs and expenses of defending against any claim of liability.
25
The provisions of this Section 18 and Section 20 below shall
survive the termination of this Agreement, the exercise or
expiration of the Rights and the resignation or removal of the
Rights Agent. 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
the acceptance and administration of this Agreement or the
exercise or performance of its duties hereunder in reliance upon
any Right Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged,
by the proper Person or Persons. The Rights Agent shall not be
deemed to have knowledge of any event for 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.
Section 19. Merger or Consolidation or Change of Name of Rights
Agents.
(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 shareholder 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 21. In case at the time such successor
Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
26
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations, and only the duties and obligations, expressly
imposed by this Agreement (and no implied duties or obligations) upon
the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (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 in good faith 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 be
herein specifically prescribed) shall be deemed to be
conclusively proved and established by a certificate signed by
the Chief Executive Officer, the President, any Executive Vice
President, any Senior Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such
certificate 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 in good
faith 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 event shall
the Rights Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost profits), even if the Rights
Agent has been advised of the possibility of such loss or damage.
Any liability of the Rights Agent under this Agreement will be
limited to Fifty Thousand Dollars ($50,000).
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not have any liability for, nor
be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
27
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(d)) or
any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13, 23
or 24, or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice of
any such adjustment); 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 Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of Common Stock or Preferred Stock will,
when issued, be duly authorized, validly 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 performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chief Executive Officer, the President, any
Executive Vice President, any Senior Vice President, or the
Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and
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 by it in good faith in accordance with the advice or
instructions of any such officer.
(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 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, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company, to any holders of Rights
or to any other Person resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or
willful misconduct in the selection and continued employment
thereof (as finally determined by a court of competent
jurisdiction).
28
(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 it believes that
repayment of such funds or adequate indemnification against such
risk or liability is not assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 or 2 thereof, the
Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with
the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company
and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and, subsequent to the Distribution Date,
to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preferred Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate 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 Person organized and
doing business under the laws of the United States or of any
state of the United States, in good standing, which is authorized
under such laws to exercise stock transfer or corporate trust
powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least
$50,000,000 or an Affiliate of a Person described in Section
21(a). After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Stock and the Preferred Stock, and, subsequent to the
Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
29
any notice provided for in this Section 21, or any defect
therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option, issue
new Right Certificates evidencing Rights in such form as may be
approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares of stock
issuable upon exercise of the Rights made in accordance with the
provisions of this Agreement.
Section 23. Redemption.
(a) The Board may, at its option, at any time prior to the
earlier of the occurrence of a Section 11(a)(ii) Event and the
Close of Business on the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time,
on such basis and with such conditions as the Board in its sole
discretion may establish. The Redemption Price shall be payable,
at the option of the Company, in cash, shares of Common Stock or
such other form of consideration as the Board shall determine.
(b) Immediately upon the action of the Board electing to
redeem the Rights (or at such later time as the Board may
establish for the effectiveness of such redemption), and without
any further action and without any notice, the right to exercise
the Rights will terminate and thereafter the only right of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give
notice of such redemption to the Rights Agent and the holders of
the Rights in the manner set forth in Section 26; provided that
the failure to give, or any defect in, such notice shall not
affect the validity of such redemption. 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.
Section 24. Exchange.
(a) At any time after the occurrence of a Section 11(a)(ii)
Event, the Board may, at its option, exchange all or part of the
then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to Section 7(d))
for 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 date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to effect such
exchange at any time after an Acquiring Person, together with all
30
Affiliates and Associates of such Acquiring Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock
then outstanding. From and after the occurrence of a Section 13
Event, any Rights that theretofore have not been exchanged
pursuant to this Section 24(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged
pursuant to this Section 24(a). The exchange of the Rights by
the Board may be made effective at such time, on such basis and
with such conditions as the Board in its sole discretion may
establish.
(b) Immediately upon the effectiveness of the action of the
Board electing to exchange any Rights pursuant to Section 24(a)
and without any further action and without any notice, the right
to exercise such Rights will terminate and thereafter the only
right of the holders of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly thereafter give notice of such exchange to
the Rights Agent and the holders of the Rights to be exchanged in
the manner set forth in Section 26; provided that the failure to
give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights that have become void pursuant to
Section 7(d)) held by each holder of Rights.
(c) The Company may at its option substitute (and, in the
event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit
the exchange of Rights for Common Stock ordered in accordance
with Section 24(a), the Company shall substitute to the extent of
such insufficiency), for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of one
one hundredths of a share of Preferred Stock such that the
current market price (determined pursuant to Section 11(d)) of
such number of one one hundredths of a share of Preferred Stock
is equal to the current market price (determined pursuant to
Section 11(d)) of one share of Common Stock as of the date of
such exchange.
Section 25. Notice of Proposed Actions.
(a) In case the Company shall propose, at any time after
the Distribution Date, 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), or to offer to the holders of its
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, or
to effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision or combination
31
of outstanding shares of Preferred Stock) or to effect any
consolidation or merger with any other Person, or to effect
and/or to permit one or more of its Subsidiaries to effect any
sale or other transfer, in one transaction or a series of related
transactions, of assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons,
or to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each
holder of a Right, to the extent feasible, and to the Rights
Agent, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of
any such dividend, distribution or offering of rights or
warrants, or the date on which any 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 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 Section 25(a)(i) or 25(a)(ii) above at least 20
days prior to the record date for determining holders of the
Preferred Stock entitled to participate in such dividend,
distribution or offering, and in the case of any such other
action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of Preferred Stock, whichever shall be the earlier. The
failure to give notice required by this Section or any defect
therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filing by the
Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of securities of the
Company, including the Rights, for purposes of this Agreement and
no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give
to each holder of a Right, in accordance with Section 26, and to
the Rights Agent, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) or 13, as the case may
be, and all references in Section 25(a) to Preferred Stock shall
be deemed thereafter to refer to Common Stock or other capital
stock, as the case may be.
Section 26. Notices. Notices to or demands on the Company
authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Right shall be sufficiently given or made if
sent by first-class mail (postage prepaid) to the address of the
Company indicated on the signature page hereof or such other
address as the Company shall specify in writing to the Rights
Agent. Subject to the provisions of Section 21, any notice to or
demand on the Rights Agent authorized by this Agreement to be
given or made by the Company or by the holder of any Right shall
be sufficiently given or made if sent by first-class mail
(postage prepaid) to the address of the Rights Agent indicated on
the signature page hereof or such other address as the Rights
Agent shall specify in writing to the Company, with a copy to:
Mellon Investor Services LLC, 00 Xxxxxxxxxx Xxxx, Xxxxxxxxxx
Xxxx, Xxx Xxxxxx 00000, Attention: General Counsel, Facsimile
32
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 Right Certificate (or, prior to the
Distribution Date, to the holder of any certificate representing
shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail (postage prepaid) to the address of such
holder shown on the registry books of the Company.
Section 27. Supplements and Amendments. For so long as
the Rights are then redeemable, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of
certificates representing shares of Common Stock. At any time when the
Rights are no longer redeemable, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights;
provided, however, that no such supplement or amendment may (a)
adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), (b) cause this Agreement again to become
amendable other than in accordance with this sentence, or (c)
cause the Rights again to become redeemable. Upon the delivery
of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section, and provided such supplement or
amendment does not change or increase the Rights Agent's duties,
liabilities or obligations hereunder, the Rights Agent shall
execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determinations and Actions by the Board, etc.
For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange
Act as in effect on the date of this Agreement. 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 the
right and power to interpret the provisions of this Agreement
and make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination
to redeem or exchange or not to redeem or exchange the Rights or
to amend the 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 of Directors 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 Persons and (y) not subject the Board of Directors to any
liability to the holders of the Rights. The Rights Agent shall
33
always be entitled to assume that the Board of Directors acted in
good faith and shall be fully protected and incur no liability in
reliance thereon.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the certificates
representing the shares of 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 egistered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of
Common Stock).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and
each Right Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within
such State; provided, however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall 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.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.
Section 34. Descriptive Headings. The captions herein are
included for convenience of reference only, do not constitute a part of
this Agreement and shall be ignored in the construction and interpretation
hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
STRATUS PROPERTIES INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx, III
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxx, III
Title: President and Chief
Executive Officer
00 Xxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: General Counsel and
Secretary
MELLON INVESTOR SERVICES LLC
By:
Name:
Title:
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Relationship Manager
Exhibit 4.2 to Form 8-A filed
May 23, 2002
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES C PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
STRATUS PROPERTIES INC.
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Xxxxxxx X. Xxxxxxxxx, III, President and Chief Executive
Officer, and Xxxxxxx X. Xxxxx, General Counsel and Secretary, of
Stratus Properties Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware
("Delaware Law"), in accordance with the provisions thereof, DO
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 May 16, 2002, duly adopted the
following resolution creating a series of Preferred Stock in the
amount and having the designations, voting powers, preferences
and relative, participating, optional and other special rights
and qualifications, limitations and restrictions thereof as
follows:
Section 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series C Participating Cumulative
Preferred Stock" (the "Series C Preferred Stock"), and the number
of shares constituting such series shall be 300,000. Such number
of shares of the Series C Preferred Stock may be increased or
decreased by resolution of the Board of Directors; provided that
no decrease shall reduce the number of shares of Series C
Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares issuable upon exercise or
conversion of outstanding rights, options or other securities
issued by the Corporation.
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Section 2. Dividends and Distributions.
The holders of shares of Series C Preferred 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 on March 31, June 30, September 30
and December 31 of 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
any share or fraction of a share of Series C Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the
greater of $1.00 and subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends or other distributions and 100 times the
aggregate per share amount of all non-cash dividends or other
distributions (other than (A) a dividend payable in shares of
Common Stock of the Corporation, par value $0.01 per share (the
"Common Stock"), or (B) 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 C Preferred Stock. If the
Corporation shall at any time after May 16, 2002 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of
shares of Series C Preferred Stock were entitled immediately
prior to such event under clause 2(a)(ii) 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 C Preferred Stock as
provided in paragraph 2(a) above immediately after it
declares a dividend or distribution on the Common Stock
(other than as described in clauses 2(a)(ii)(A) and
2(a)(ii)(B) above); provided that if 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 (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first
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issuance of any share or fraction of a share of Series
C Preferred Stock and such first Quarterly Dividend
Payment Date), a dividend of $1.00 per share on the
Series C 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 C Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series C Preferred Stock,
unless the date of issue of such shares is on or before
the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares
shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is
a date after the record date for the determination of
holders of shares of Series C Preferred Stock entitled
to receive a quarterly dividend and on or before such
Quarterly Dividend Payment Date, in which case
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 shares of Series C 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 C Preferred Stock
entitled to receive payment of a dividend or
distribution declared thereon, which record date shall
not be more than 60 days prior to the date fixed for
the payment thereof.
Section 3. Voting Rights. In addition to any other voting
rights required by law, the holders of shares of Series
C Preferred Stock shall have the following voting
rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series C Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of
stockholders of the Corporation. If the Corporation shall at any
time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision
or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator
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of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein, or by law, the
holders of shares of Series C Preferred Stock and the
holders of shares of Common Stock shall vote together
as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(c) (i) If at any time dividends on any Series C Preferred
Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such
contingency shall xxxx the beginning of a period
(herein called a "default period") which shall extend
until such time as all accrued and unpaid dividends for
all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of
Series C Preferred Stock then outstanding shall have
been declared and paid or set apart for payment.
During each default period, all holders of Series C
Preferred Stock and any other series of Preferred Stock
then entitled as a class to elect directors, voting
together as a single class, irrespective of series,
shall have the right to elect two Directors.
(ii) During any default period, such voting right of
the holders of Series C Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph
3(c)(iii) hereof or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders; provided that
neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised
unless the holders of 10% in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence
of a quorum of holders of Common Stock shall not affect the
exercise by holders of Preferred Stock of such voting right. At
any meeting at which holders of Preferred Stock shall exercise
such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may
then exist up to two Directors or, if such right is exercised at
an annual meeting, to elect two Directors. If the number that
may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as
shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default period
and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari
passu with the Series C Preferred Stock.
A-4
(iii)Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may
order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of
Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of holders of
Preferred Stock, which meeting shall thereupon be called by the
Chief Executive Officer, the President, any Executive Vice Presi
dent, any Senior Vice President or the Secretary or any
Assistant Secretary of the Corporation. Notice of such meeting
and of any annual meeting at which holders of Preferred Stock
are entitled to vote pursuant to this paragraph 3(c)(iii) shall
be given to each holder of record of Preferred Stock by mailing
a copy of such notice to such holder's address as the same
appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later than 60
days after such order or request or in default of the calling of
such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the
total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this
paragraph 3(c)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date
fixed for the next annual meeting of stockholders.
(iv) In any default period, the holders of Common
Stock shall continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock shall have
exercised their right to elect two Directors voting as a class,
after the exercise of which right (x) the Directors so elected
by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy
in the Board of Directors may (except as provided in paragraph
3(c)(ii) hereof) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the
class of stock that elected the Director whose office shall have
become vacant. References in this paragraph 3(c) to Directors
elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a
class to elect Directors shall cease, (y) the term of any
A-5
Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the Certificate of Incorporation
or Bylaws irrespective of any increase made pursuant to the
provisions of paragraph 3(c)(ii) hereof (such number being
subject, however, to change thereafter in any manner provided by
law or in the certificate of incorporation or bylaws). Any
vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(d) The Certificate of Incorporation of the
Corporation shall not be amended in any manner (whether by merger
or otherwise) so as to adversely affect the powers, preferences
or special rights of the Series C Preferred Stock without the
affirmative vote of the holders of a majority of the outstanding
shares of Series C Preferred Stock, voting separately as a class.
(e) Except as otherwise provided herein, holders of Series
C Preferred Stock shall have no special voting rights,
and their consent shall not be required for taking any
corporate action.
Section 4 Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series C 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
outstanding shares of Series C Preferred Stock shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series C 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 C Preferred Stock, except dividends paid ratably
on the Series C Preferred Stock and all such other 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, purchase or otherwise acquire for value
any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series C
Preferred Stock; provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of stock of the Corporation ranking
junior (as to dividends and upon dissolution, liquidation or
winding up) to the Series C Preferred Stock; or
A-6
(iv) redeem, purchase or otherwise acquire for value
any shares of Series C Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of Series C Preferred Stock and all such other parity
stock 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 value any
shares of stock of the Corporation unless the Corporation could,
under paragraph 4(a), purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred
Stock redeemed, 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
without designation as to series 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
as permitted by the Certificate of Incorporation or as
otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution and Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock
unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received $1.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment;
provided that the holders of shares of Series C Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per
share to holders of Common Stock, or (2) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock,
except distributions made ratably on the Series C Preferred Stock
and all such other parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon
A-7
such liquidation, dissolution or winding up. If the Corporation
shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or
effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case
the aggregate amount to which holders of shares of Series C
Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, Etc. If 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 C Preferred
Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash or any other
property, as the case may be, into which or for which each share
of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or
effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series C Preferred Stock
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The Series C Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series C Preferred Stock shall rank junior
(as to dividends and upon liquidation, dissolution and winding
up) to all other series of the Corporation's preferred stock
except any series that specifically provides that such series
shall rank junior to the Series C Preferred Stock.
Section 10 Fractional Shares. Series C 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 C
Preferred Stock.
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IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this ______ day of May, 2002.
Xxxxxxx X. Xxxxxxxxx, III
Xxxxxxx X. Xxxxx
Exhibit 4.3 to Form 8-A filed
May 23, 2002
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
No. R- _______________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF MAY 29, 2012 AND THE DATE ON
WHICH THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY
THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH
IN THE RIGHTS AGREEMENT, RIGHTS ISSUED OR TRANSFERRED TO, OR HELD
BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID.
RIGHT CERTIFICATE
STRATUS PROPERTIES INC.
This Right Certificate certifies that
______________________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which
entitles the holder (upon the terms and subject to the conditions
set forth in the Rights Agreement, dated as of May 16, 2002, and
as amended from time to time (the "Rights Agreement"), between
Stratus Properties Inc., 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 and prior to the Expiration
Date, ____one-hundredth[s] of a fully paid, nonassessable share
of Series C Participating Cumulative Preferred Stock (the
"Preferred Stock") of the Company at a purchase price of $40.00
per one one-hundredth of a share (the "Purchase Price"), payable
in lawful money of the United States of America, upon surrender
of this Right Certificate, with the form of election to purchase
and related certificate duly executed, and payment of the
Purchase Price at an office of the Rights Agent designated for
such purpose.
Terms used herein and not otherwise defined herein have the
meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate
(and the number and kind of shares issuable upon exercise of each
Right) and the Purchase Price set forth above are as of May 29,
2002, and may have been or in the future be adjusted as a result
B-1
of the occurrence of certain events, as more fully provided in
the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the
Rights evidenced by this Right Certificate are beneficially owned
by (a) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (b) a transferee of an Acquiring Person (or any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (c) under certain circumstances
specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such, then the Rights evidenced by this Rights
Certificate shall become null and void, and no holder hereof
shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Upon surrender at the office of the Rights Agent designated
for such purpose and subject to the terms and conditions set
forth in the Rights Agreement, any Rights Certificate or
Certificates may be transferred or exchanged for another Rights
Certificate or Certificates evidencing a like number of Rights as
the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board
of Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i)
the occurrence of a Section 11(a)(ii) Event and (ii) the Final
Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring
Person (but before such Person becomes the Beneficial Owner of
50% or more of the shares of Common Stock then outstanding),
exchange all or part of the then outstanding Rights (other than
Rights held by the Acquiring Person and certain related Persons)
for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right. If the Rights shall be exchanged in
part, the holder of this Right Certificate shall be entitled to
receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exchanged.
No fractional shares of Preferred Stock are required to be
issued upon the exercise of any Right or Rights evidenced hereby
(other than fractions which are integral multiples of one
B-2
one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Certificates for
the number of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder
of the shares of capital stock which may at any time be issuable
on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
B-3
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its corporate seal by on of its
authorized officers.
Dated as of , 20__
STRATUS PROPERTIES INC.
By:
Title:
Countersigned:
MELLON INVESTOR SERVICES LLC,
as Rights Agent
By:
Authorized Signature
Form of Reverse Side of Right Certificate
B-4
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ______________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: _____________________, 20__
Signature
Signature Guaranteed:
B-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate
___are ___are not being assigned by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ___________, 20__
Signature
--------------------
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
-------------------
B-6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights
represented by the Right Certificate.)
To: Stratus Properties Inc.
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to
purchase shares of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for
the balance of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ______________, 20__
Signature
Signature Guaranteed:
B-7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate
___are ___are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ____________, 20__
Signature
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
-------------------
B-8
Exhibit 4.4 to Form 8-A filed
May 23, 2002
EXHIBIT C
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED OR
TRANSFERRED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
MAY BE NULL AND VOID.
SUMMARY OF RIGHTS
STRATUS PROPERTIES INC.
STOCKHOLDER RIGHTS PLAN
dated May 16, 2002
Summary of Terms
Form of Security The Board has declared a dividend of one
preferred stock purchase right for each
outstanding share of the Company's Common
Stock, payable to holders of record as of
the Close of Business on May 29, 2002 (each
a "Right" and collectively, the "Rights").
Transfer Prior to the Distribution Date1
--------------------------------
Distribution Date generally means the earlier of:
(1) the 10th day after public announcement that any
person or group has become the beneficial owner of the
Threshold Percentage; and
(2) the 10th business day after the date of the
commencement of a tender or exchange offer by any
person which would, if consummated, result in such
person becoming the beneficial owner of the Threshold
Percentage., the Rights generally will be evidenced by
the certificates for and will be transferred with the
Common Stock, and the registered holders of the Common
Stock will be deemed to be the registered holders of
the Rights.
C-1
After the Distribution Date, the Rights
Agent will mail separate certificates
evidencing the Rights to each record holder
of the Common Stock as of the close of
business on the Distribution Date, and
thereafter the Rights will be transferable
separately from the Common Stock.
Exercise Prior to the Distribution Date, the Rights
will not be exercisable.
After the Distribution Date, prior to the
occurrence of an event described below under
"Flip-In" and "Flip-Over", each Right will
be exercisable to purchase, for $40.00 (the
"Purchase Price"), one one-hundredth of a
share of Series C Participating Cumulative
Preferred Stock, par value $0.01 per share,
of the Company.
Flip-In If any person or group (an "Acquiring
Person") becomes the beneficial owner of the
Threshold Percentage, then each Right (other
than Rights beneficially owned by the
Acquiring Person and certain affiliated
persons) will entitle the holder to
purchase, for the Purchase Price, a number
of shares of the Company's Common Stock
having a market value of twice the Purchase
Price. "Threshold Percentage" means 20% of
all then-outstanding Common Stock.
Flip-Over If, after any person has become an Acquiring
Person, (1) the Company is involved in a
merger or other business combination in
which the Company is not the surviving
corporation or its Common Stock is exchanged
for other securities or assets or (2) the
Company and/or one or more of its
subsidiaries sell or otherwise transfer
assets or earning power aggregating more
than 50% of the assets or earning power of
the Company and its subsidiaries, taken as a
whole, then each Right will entitle the
holder to purchase, for the Purchase Price,
a number of shares of common stock of the
other party to such business combination or
sale (or in certain circumstances, an
affiliate) having a market value of twice
the Purchase Price.
Exchange At any time after any person has become an
Acquiring Person (but before any person
becomes the beneficial owner of 50% or more
C-2
of the Company's Common Stock), the Board
may exchange all or part of the Rights
(other than the Rights beneficially owned by
the Acquiring Person and certain affiliated
persons) for shares of Common Stock at an
exchange ratio of one share of Common Stock
per Right.
Redemption The Board may redeem all of the Rights at a
price of $0.01 per Right at any time prior
to the time that any person becomes an
Acquiring Person.
Expiration The Rights will expire on May 29, 2012,
unless earlier exchanged or redeemed.
Amendments For so long as the Rights are redeemable,
the Rights Agreement may be amended in any
respect.
At any time after the Rights are no longer
redeemable, the Rights Agreement may not be
amended in any respect that would adversely
affect the Rights holders (other than any
Acquiring Person and certain affiliated
persons) or cause the Rights again to become
redeemable.
Voting Rights A rights holder has no rights as a
stockholder of the Company, including the
right to vote and to receive dividends.
Antidilution Provisions The Rights Agreement includes standard
antidilution provisions designed to protect
the efficacy of the Rights.
Taxes While the dividend of the Rights will not be
taxable to stockholders or to the Company,
stockholders or the Company may, depending
upon the circumstances, recognize taxable
income in the event that the Rights become
exercisable as set forth above.
Legend Common Stock certificates issued after May
29, 2002 will contain a legend referring to
the Rights discussed herein. With respect
to currently outstanding Common Stock
certificates, the Rights discussed herein
will be evidenced by such certificates
registered in the names of the holders
thereof, with or without a copy of this
Summary of Rights.
-------------------------
C-3
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, as amended from time to
time, the complete terms of which are hereby incorporated by
reference.
-------------------
C-4
