1
FORM OF Exhibit 4.2
RIGHTS AGREEMENT
dated as of
[ ], 2000
between
AETNA INC.
and
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent
2
TABLE OF CONTENTS
----------------------
PAGE
----
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............................. 8
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. 9
SECTION 8. Cancellation and Destruction of Right Certificates............ 11
SECTION 9. Reservation and Availability of Capital Stock................. 11
SECTION 10. Preferred Stock Record Date................................... 12
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights........................................ 13
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.... 21
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.............................................. 22
SECTION 14. Fractional Rights and Fractional Shares....................... 24
SECTION 15. Rights of Action.............................................. 26
SECTION 16. Agreement of Right Holders.................................... 26
SECTION 17. Right Certificate Holder Not Deemed a Shareholder............. 27
SECTION 18. Concerning the Rights Agent................................... 27
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agents..................................................... 28
SECTION 20. Duties of Rights Agent........................................ 28
SECTION 21. Change of Rights Agent........................................ 31
SECTION 22. Issuance of New Right Certificates............................ 32
SECTION 23. Redemption.................................................... 32
SECTION 24. Exchange...................................................... 32
SECTION 25. Notice of Proposed Actions.................................... 33
SECTION 26. Notices....................................................... 34
SECTION 27. Directors to Review Rights Agreement.......................... 35
SECTION 28. Supplements and Amendments.................................... 35
SECTION 29. Successors.................................................... 36
SECTION 30. Determinations and Actions by the Board, etc.................. 36
SECTION 31. Benefits of this Agreement.................................... 36
SECTION 32. Severability.................................................. 36
SECTION 33. Governing Law................................................. 36
SECTION 34. Counterparts.................................................. 37
SECTION 35. Descriptive Headings.......................................... 37
3
Exhibit A - Terms of Class A Voting Preferred Shares
Exhibit B - Form of Right Certificate
Exhibit C - Summary Description of the Shareholder Rights Plan
4
RIGHTS AGREEMENT
AGREEMENT dated as of [ ], 2000 between Aetna Inc., a Pennsylvania
corporation (the "COMPANY"), and EquiServe Trust Company, N.A., as Rights Agent
(the "RIGHTS AGENT"),
W I T N E S S E T H
WHEREAS, on [ ], 2000 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 [ ], 2000 (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:
SECTION 1. 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, shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding, 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" became 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 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 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
5
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 15% or more of the shares of Common Stock
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding
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 15% or more of the shares of
Common Stock then outstanding.
"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) which 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) which 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 which 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
2
6
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 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) which 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 Commonwealth of Pennsylvania are authorized or
obligated by law or executive order to close.
3
7
"CLOSE OF BUSINESS" on any given date means 5:00 P.M., Philadelphia
time, on such date; provided, however, that if such date is not a Business Day
"close of business" means 5:00 P.M., Philadelphia time, on the next succeeding
Business Day.
"COMMON STOCK" means the Common Shares, par value $.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.
"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.
"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 to the extent that such entity or trustee holds 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 [ ], 2010.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or any other entity or organization.
"PREFERRED STOCK" means the Class A Voting Preferred Shares, par value
$.01 per share, of the Company, having the terms set forth in the Amended and
Restated Articles of Incorporation of the Company, as amended as of [ ],
2000, relevant excerpts of which are attached hereto as Exhibit A.
4
8
"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) upon exercise of a
Right, which price shall initially be $139.
"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 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.
"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 and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable upon ten (10) days prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Rights Agent. 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.
SECTION 3. Issue of Right Certificates. (a) Prior to the Distribution
Date, (i) the Rights will be evidenced (subject to the penultimate sentence of
this
5
9
Section 3(a)) by the certificates for the Common Stock or by a current ownership
statement issued with respect to uncertificated Common Stock (an "OWNERSHIP
STATEMENT") 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 (ii) 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 send a copy of the
Summary of Rights substantially in the form of Exhibit C hereto, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Record Date at the address of such holder shown on the
records of the Company. With respect to any certificate or Ownership Statement
for Common Stock outstanding as of the Record Date, prior to the Distribution
Date, the Rights associated with the Common Stock represented by such
certificate, or covered by such Ownership Statement, will be evidenced by such
certificate, or Ownership Statement, registered in the names of the holders
thereof together with 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, or the transfer of
any Common Stock outstanding on the Record Date represented by any Ownership
Statement, 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, the Rights Agent will send, by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date (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 (i) 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
6
10
arrangement or (y) upon the exercise, conversion or exchange of other securities
issued by the Company prior to the Distribution Date and (ii) 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, however, 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.
(d) Certificates (or Ownership Statements) 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] [statement] also evidences certain
Rights as set forth in a Rights Agreement between
Aetna Inc. and EquiServe Trust Company, N.A., as
Rights Agent, dated as of [ ], 2000 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]
[statement] 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] [statement], 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 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
7
11
the form of Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any 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 Chairman, its
President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The 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, the Rights Agent will keep or
cause to be kept, at its principal office or offices 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. (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 principal
8
12
office or offices 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.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably 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 executed, to the Rights Agent at the principal
office or offices 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 (i) (A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer 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 (B) 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
9
13
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, (ii)
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 (iii) 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 appropriate.
(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 Section 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 (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) 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) 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 (B) 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 use all
reasonable efforts to insure that the provisions of this Section 7(d) are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates and Associates or any
transferee of any of them hereunder.
10
14
(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 (i) shall have 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, (ii) shall not have indicated an
affirmative response to clause 1 or 2 thereof and (iii) 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 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 cancelled 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 cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled 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 which 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 (i) 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, (ii) to cause such
registration statement to
11
15
become effective as soon as practicable after such filing and (iii) 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 (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the 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 clause 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 issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. 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 federal and state transfer taxes and other governmental
charges which 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 which 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
12
16
other governmental charges) was made; provided, however, 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 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 shareholder 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 (A) pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock into a greater
number of shares, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation, merger, share exchange or division 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
which 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 of
the Company (such shares
13
17
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
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 to the
foregoing provisions of 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 which 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, (A) (to the
extent available) Common Stock and then, (B) (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, (C) 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, however, that the Company
may, and 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, (1) (to the extent available) Common Stock and then (2) (to the
extent available) one one-hundredths of a share of
14
18
Preferred Stock and then, if necessary, (3) 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 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 issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price per share of 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 which 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
15
19
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 which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation, merger, share exchange or division
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
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 which 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 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 Common
Stock for such Trading Day; provided, however, that if the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) 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 (B) any
16
20
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 the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation Stock
Market ("NASDAQ") or such other system then in use or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board (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 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 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
17
21
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, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other 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
Sections 11(a), 11(b), 11(c), 11(e), 11(g), 11(h), 11(i), 11(j), 11(k) and
11(m), and 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 or 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
18
22
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
(i) 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
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of 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 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. 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
19
23
continue to express the Purchase Price per one one-hundredth of a share and the
number of shares which 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 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 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 issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything 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 shareholders.
(n) The Company covenants and agrees that it will not at any time after
the Distribution Date (i) consolidate, merge, engage in a share exchange or
otherwise combine with, (ii) divide, or (iii) sell or otherwise transfer (and/or
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, share exchange,
combination, division or sale there
20
24
are any rights, warrants or other instruments or securities outstanding or any
agreements or arrangements in effect which 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,
share exchange, combination, division or sale, the shareholders 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 28, 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 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) 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 or Ownership Statement representing 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.
21
25
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, or the Company shall divide
into two or more corporations and the Company shall not be the
continuing or surviving corporation of such consolidation, merger,
combination or division,
(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, or the Company shall engage
in a share exchange and, in connection with such merger, combination or
share exchange, 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
22
26
Principal Party on the date of consummation of such
consolidation, merger, combination, sale or transfer;
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, combination, share exchange,
division, sale or transfer;
(ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination,
share exchange, division, 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 of the Company are converted in such
merger, consolidation, combination, share exchange or division and if
no securities are so issued, the Person that survives or results from
such merger, consolidation, combination, share exchange or division;
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, however, that in any such case, (A) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered
23
27
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 (B) 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, share exchange, division, sale or transfer unless the Principal
Party shall have a sufficient number of authorized shares of its Common 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, share exchange,
division, 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 which
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 which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
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
24
28
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange on which
the Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. 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, 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 which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are 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-hundredth of the
closing price of a share of Preferred Stock (as determined pursuant to Section
11(d)(i)) 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 which evidence fractional shares of 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.
25
29
SECTION 15. Rights of Action. 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.
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 principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to 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 (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
26
30
(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 or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company
must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
SECTION 17. Right Certificate Holder Not Deemed a Shareholder. 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
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in 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 execution or administration 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, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the 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.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with the 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,
27
31
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.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agents.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21.
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 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 imposed by this Agreement 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 opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
28
32
(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 to take any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by the Chief Executive Officer, the Chief Financial
Officer, the Corporate Secretary or any designees of any such officer
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for 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.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including 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.
29
33
(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 Chief Financial
Officer, the Corporate Secretary or any designees of any such officer
and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not 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 or to any holders of Rights resulting from any such act,
default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(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 cases
may be, has either not been completed or indicates an affirmative
response to clause 1 or 2
30
34
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)
a corporation 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 the laws of the State of New York 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 (b) an Affiliate of a
corporation described in clause 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 that
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 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.
31
35
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 or assets
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 (i) the occurrence of a Section 11(a)(ii) Event and (ii)
the Final Expiration Date, redeem all of 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, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such redemption. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
SECTION 24. Exchange. (a) 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 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
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
32
36
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 a holder 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,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to 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, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) 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 (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision or combination of outstanding
shares of Preferred Stock) or (iv) to effect any
33
37
consolidation, merger or share exchange 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 (v) to effect a division or 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 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, share exchange, sale,
transfer, division, 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 clause 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, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right,
in accordance with Section 26, 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 (ii) 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 or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right to or on the
Company 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 or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right to or
on the Rights Agent shall be sufficiently given or made if sent by first-class
34
38
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. 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 or Ownership Statement 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. Directors to Review Rights Agreement. It is understood that
the Independent Directors Committee (as defined below) of the Board shall review
and evaluate this Rights Agreement in order to consider whether the maintenance
of this Rights Agreement continues to be in the interests of the Company, its
shareholders and any other relevant constituencies of the Company, at least once
every three years. Following each such review, the Independent Directors
Committee will communicate its conclusions to the full Board, including any
recommendation in light thereof as to whether this Rights Agreement should be
modified or the rights should be redeemed. The Independent Directors Committee
shall, subject to the final proviso of this sentence, be comprised of all of the
directors of the Company who are independent of the management of the Company
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of independent judgment as a member of the
Independent Director Committee; provided, however, that any director who is an
officer or employee of the Company or its subsidiaries shall not qualify for
membership in the Independent Director Committee; provided further, however,
that a director who was formerly an officer of the Company or any of its
subsidiaries may qualify for membership even though he or she may be receiving
pension or deferred compensation payments from the Company if, in the opinion of
the Board, such person will exercise independent judgment and will materially
assist the function of the Independent Director Committee; provided further,
however, that a majority of the Independent Director Committee shall, at all
times, consist of directors who were not formerly officers of the Company or any
of its subsidiaries.
SECTION 28. 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 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
35
39
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, the Rights Agent shall execute such
supplement or amendment.
SECTION 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 30. 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 (i)
interpret the provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or exchange or not to redeem or exchange
the Rights or to amend the Agreement).
SECTION 31. 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 or Ownership Statements 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 registered holders of the Right Certificates (and, prior to
the Distribution Date, the certificates or Ownership Statements representing the
shares of Common Stock).
SECTION 32. 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 33. 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 Commonwealth of Pennsylvania and for all purposes shall be governed
by
36
40
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
SECTION 34. 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 35. 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.
37
41
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.
AETNA INC.
By:
------------------------------------------
Name:
Title:
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
EQUISERVE TRUST COMPANY, N.A.
By:
------------------------------------------
Name:
Title:
[Address]
42
EXHIBIT A
TERMS OF CLASS A VOTING PREFERRED SHARES
(a) Authorized Shares. Of the 825,125,000 shares that the Corporation is
authorized to issue, 7,625,000 shares are hereby designated Class A Voting
Preferred Shares, which shares shall constitute a single class with the terms,
limitations and relative rights and preferences set forth in this Section II.
The Board of Directors shall not have the authority to decrease the number of
authorized Class A Voting Preferred Shares.
(b) Dividends.
(1) The holders of Class A Voting Preferred Shares shall be entitled
to receive cumulative quarterly dividends payable in cash (or in kind to the
extent provided in this subsection (b)) on the fifteenth day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share of Class A Voting Preferred
Shares (the "First Quarterly Dividend Payment Date"), in an amount per share
(rounded to the nearest cent), subject to the provisions for adjustment set
forth in this subsection (b), equal to 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares on or since the
immediately preceding Quarterly Dividend Declaration Date, as defined below, or,
with respect to the first Quarterly Dividend Declaration Date, since the first
issuance of any share of Class A Voting Preferred Shares. If no dividend or
distribution shall have been declared on the Common Shares during the period
between any Quarterly Dividend Declaration Date and the next subsequent
Quarterly Dividend Declaration Date, the holders of Class A Voting Preferred
Shares shall be entitled to receive a dividend of $0.01 per share on the next
subsequent Quarterly Dividend Payment Date. The Corporation shall declare a
dividend on the Class A Voting Preferred Shares on the fifth day of March, June,
September and December of each year (each such date being referred to herein as
a "Quarterly Dividend Declaration Date"), commencing on the first Quarterly
Dividend Declaration Date after the first issuance of a Class A Voting Preferred
Share. If the Corporation shall at any time after the effective time of the
merger (the "Merger") of ANB Acquisition Corp., a Connecticut corporation, with
and into Aetna Inc., a Connecticut corporation, pursuant to a certain Agreement
and Plan of Restructuring and Merger, dated as of July 19, 2000: (i) declare a
dividend on the outstanding Common Shares payable in Common Shares, (ii) split
up or divide the outstanding Common Shares, (iii) combine the outstanding Common
Shares into a smaller number of shares, or (iv) issue any shares in a
reclassification of the outstanding Common Shares (including without limitation
any such reclassification in connection with a consolidation, merger or division
in which the Corporation is a continuing or surviving corporation), then, in
each such case, and regardless of whether any Class A Voting Preferred Shares
are then issued or outstanding, the amount per share to which each holder of
Class A Voting Preferred Shares would be entitled immediately prior to such
event under the first sentence of this paragraph (1) shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
A-1
43
(2) Dividends shall begin to accrue and be cumulative on outstanding
Class A Voting Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares: (i) unless the date of issue of such
shares is prior to the record date for the First Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of the first issuance of a share of Class A Voting Preferred Shares; or (ii)
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of Class A Voting Preferred
Shares entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from the Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the Class A Voting
Preferred Shares 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 Class A
Voting Preferred Shares entitled to receive payment of a dividend or other
distribution declared thereon, which record date shall be not more than 90
calendar days prior to the date fixed for the payment thereof.
(3) Whenever dividends payable on the Class A Voting Preferred
Shares as provided in this Article 4 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
shares of Class A Voting Preferred Shares outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any Common Shares or any other shares ranking junior (either as to dividends
or upon dissolution) to the Class A Voting Preferred Shares;
(ii) declare or pay dividends, or make any other
distributions, on any shares ranking on a parity (either as to dividends or upon
dissolution) with the Class A Voting Preferred Shares, except dividends paid
ratably on the Class A Voting Preferred Shares and all such parity shares 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; or
(iii) redeem or purchase or otherwise acquire for
consideration Common Shares or any other shares ranking junior (either as to
dividends or upon dissolution) to the Class A Voting Preferred Shares; provided,
however, that the Corporation may at any time redeem, purchase or otherwise
acquire any such junior shares in exchange for shares of the Corporation ranking
junior (either as to dividends or upon dissolution) to the Class A Voting
Preferred Shares.
(c) Dissolution.
(1) Upon any voluntary or involuntary dissolution of the
Corporation, no distribution or payment shall be made (i) to the holders of
Common Shares or any other shares ranking junior (either as to dividends or upon
dissolution) to the Class A Voting Preferred Shares, unless prior thereto the
holders of Class A Voting Preferred Shares shall have received an aggregate
amount per share, subject to the provisions for adjustment set forth in this
subsection (c), equal to 100 times the aggregate amount to be distributed per
share to holders of Common Shares, plus an amount equal to all accrued and
unpaid dividends and distributions on the Class A Voting Preferred Shares,
whether or not declared, to the date of such payment, or (ii) to the holders of
shares ranking on a parity (either as to dividends or upon dissolution) with the
Class A Voting Preferred Shares, except distributions made ratably on the Class
A Voting Preferred Shares and all other such parity shares in proportion to the
total amounts to which the holders of all such shares are entitled upon such
dissolution. If the Corporation shall at any time after the effective time of
the Merger: (A) declare a dividend on the outstanding Common Shares payable in
Common Shares, (B) split up or divide the outstanding Common Shares, (C) combine
the outstanding Common Shares into a smaller number of shares, or (D) issue any
shares in a reclassification of the outstanding Common Shares (including without
limitation any such reclassification in connection with a consolidation, merger
or division in which the Corporation is a continuing or surviving corporation);
then, in each such case, and regardless of whether any Class A Voting Preferred
Shares are then issued or outstanding, the aggregate amount per share to which
each holder of Class A Voting Preferred Shares would be entitled immediately
prior to such event under the provision in clause (i) of the first sentence of
this paragraph (1) shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
A-2
44
(2) If the net assets of the Corporation shall be insufficient to
pay in full the amounts set forth in paragraph (1) of this subsection (c) in
respect of the Class A Voting Preferred Shares, together with the aggregate
dissolution preference for the outstanding shares of all other classes ranking
on a parity with the Class A Voting Preferred Shares as to payments upon
dissolution, then the entire net assets of the Corporation shall be distributed
among the holders of shares of all such parity classes, who shall receive their
pro rata portion of the net assets of the Corporation.
(3) Neither the consolidation nor the merger of the Corporation with
or into another corporation or corporations, nor the division of the Corporation
into two or more corporations, nor the sale or transfer by the Corporation of
all or any part of its assets, shall be deemed a dissolution of the Corporation.
(d) Redemption. The Class A Voting Preferred Shares shall not be
redeemable.
(e) No Conversion Rights. Holders of Class A Voting Preferred Shares shall
have no right to convert such shares into or exchange them for Common Shares, or
other securities or assets of the Corporation or any other issuer.
(f) Voting Rights.
(1) Subject to the provisions for adjustment hereinafter set forth
in this paragraph (1), each Class A Voting Preferred Share shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. If the Corporation shall at any time after the
effective time of the Merger: (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) split up or divide the outstanding Common
Shares, (iii) combine the outstanding Common Shares into a smaller number of
shares, or (iv) issue any shares in a reclassification of the outstanding Common
Shares (including without limitation any reclassification in connection with a
consolidation, merger or division in which the Corporation is a continuing or
surviving corporation), then, in each such case, and regardless of whether any
shares of Class A Voting Preferred Shares are then issued or outstanding, the
number of votes per share to which each holder of Class A Voting Preferred
Shares would be entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
(2) Except as otherwise provided in these articles of incorporation
or as required by law, the holders of Class A Voting Preferred Shares and the
holders of Common Shares shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(3) Except as otherwise provided in these articles of incorporation
or as required by law, the holders of Class A Voting Preferred Shares shall have
no special voting rights, and their affirmative vote or consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Shares) for the taking of any corporate action.
A-3
45
(4) These articles of incorporation shall not be amended in any
manner that would materially alter or change the voting rights, powers,
preferences, limitations or special rights of the Class A Voting Preferred
Shares so as to affect them adversely without the affirmative vote of the
holders of at least a majority of the outstanding Class A Voting Preferred
Shares, voting separately as a class.
(g) Consolidation, Merger, Division, Etc.
(1) In case the Corporation shall enter into any consolidation,
merger, share exchange, division, combination or other transaction in which the
Common Shares are exchanged for or changed into other shares or securities, cash
and/or any other property, then in any such case each Class A Voting Preferred
Share shall at the same time be similarly exchanged for or changed into an
amount per share, subject to the provisions for adjustment set forth in
paragraph (2) of this subsection (g), equal to 100 times the aggregate amount of
shares, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each Common Share is changed or exchanged.
(2) If the Corporation shall at any time after the effective time of
the Merger: (i) declare a dividend on the outstanding Common Shares payable in
Common Shares, (ii) split up or divide the outstanding Common Shares, (iii)
combine the outstanding Common Shares into a smaller number of shares, or (iv)
issue any shares in a reclassification of the outstanding Common Shares
(including without limitation any such reclassification in connection with a
consolidation, merger or division in which the Corporation is a continuing or
surviving corporation), then, in each such case, and regardless of whether any
Class A Voting Preferred Shares are then issued or outstanding, the aggregate
amount per share to which each holder of Class A Voting Preferred Shares would
be entitled immediately prior to such event under paragraph (1) of this
subsection (g) shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(h) Transfer Agent. The Corporation shall always have at least one
transfer agent for the Class A Voting Preferred Shares, which may be the
Corporation or a bank or trust corporation in good standing.
(i) Reacquired Shares. Any Class A Voting Preferred Shares that are
purchased, surrendered to or otherwise acquired by the Corporation in any manner
whatsoever shall assume the status of authorized but unissued Class A Voting
Preferred Shares and may thereafter be reissued in the same manner as other
authorized but unissued Class A Voting Preferred Shares.
A-4
46
EXHIBIT B
(Form of Right Certificate)
Certificate No. R-__________________Rights
NOT EXERCISABLE AFTER [ ], 2010, OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED
IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
AETNA INC.
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of [ ], 2000 (the "RIGHTS AGREEMENT") between Aetna
Inc., a Pennsylvania corporation (the "COMPANY"), and EquiServe Trust Company,
N.A. (the "RIGHTS AGENT"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. (Eastern time) on [ ], 2010 at the principal office of the Rights
Agent or its successor as Rights Agent, one one-hundredth of a fully paid and
nonassessable share of the Class A Voting Preferred Stock, par value $.01 per
share (the "PREFERRED SHARES"), of the Company, at a purchase price of $139
per one one-hundredth of a Preferred Share (the "PURCHASE PRICE"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of Preferred Shares which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
per one one-hundredth of a Preferred Share set forth above, are the number and
Purchase Price as of [ ], 2000. No Right is exercisable at any time
prior to the Distribution Date (as such term is defined in the Rights
Agreement).
B-1
47
As provided in the Rights Agreement, the Purchase Price and the number
and kind of securities which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events, and the Rights are subject to amendment,
redemption and certain other events.
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. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), (i) any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any Affiliate or
Associate of such Acquiring Person, or any transferee of any such Person) shall
be void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of the Rights Agreement, (ii) no Right
Certificate shall be issued pursuant to the Rights Agreement that represents
Rights beneficially owned by any Acquiring Person or any Affiliate or Associate
thereof, (iii) no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person or any Affiliate or Associate
thereof or to any nominee of such Acquiring Person or Affiliate or Associate
thereof, and (iv) any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person or any Affiliate or Associate thereof shall be
canceled.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates
entitling the holder to purchase a like aggregate number of Preferred Shares (or
other securities, as the case may be) as the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right.
B-2
48
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby. Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receipts. In lieu of issuing fractional
Preferred Shares, the Company may make a cash payment, as provided in the Rights
Agreement, or take such other action permissible under applicable law as the
Company's Board of Directors deems appropriate.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any Purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise of the Right or Rights represented hereby, nor shall
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the 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
49
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officer.
Dated as of
---------------------
AETNA INC.
By:
----------------------------------
Title:
Countersigned:
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
By:
---------------------------------
Authorized Signature
B-4
50
Form of Reverse Side of Right Certificate
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: _____________________, ____
__________________________________
Signature
Signature Guaranteed:
B-5
51
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: __________, ____
_______________________________________
Signature
------------------
The signature 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
52
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights
represented by the Right Certificate.)
To: AETNA INC.
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Class A
Voting 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: ________________, ____
___________________________________
Signature
Signature Guaranteed:
B-7
53
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: ____________, ____ _____________________________________
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
54
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
AETNA INC.
SHAREHOLDER RIGHTS PLAN
Summary of Terms
NEW RIGHTS PLAN The Board of Directors has adopted a new
Rights Agreement between the Company and
EquiServe Trust Company, N.A.
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 [ ], 2000
(each a "RIGHT" and collectively, the
"RIGHTS")
TRANSFER Prior to the Distribution Date(1), generally
will be evidenced by the certificates for or
ownership
--------
(1) 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 15% or more of the Company's Common
Stock; 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 15% or more of
the Company's Common Stock.
C-1
55
statement representing an interest in the
Common Stock 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.
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 $139 (the
"PURCHASE PRICE"), one one-hundredth of a
share of Class A Voting Preferred Stock,
$.01 par value per share, of the Company.
FLIP-IN Subject to certain exceptions, if any person
or group (an "ACQUIRING PERSON") becomes the
beneficial owner of 15% or more of the
Company's Common Stock, 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.
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
C-2
56
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
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 the Company's 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.
PERIODIC REVIEW A committee of independent directors will
review the Rights Agreement at least once
every three years and recommend to the
Company's Board whether the Plan should be
amended or the Rights redeemed.
EXPIRATION The Rights will expire on [ ], 2010,
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 holder of Rights only has no rights as a
shareholder of the Company, including the
right to vote and to receive dividends.
C-3
57
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 shareholders or to the Company,
shareholders or the Company may, depending
upon the circumstances, recognize taxable
income in the event that the Rights become
exercisable as set forth above.
------------------
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 10. 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
