RIGHTS AGREEMENT dated as of December 18, 2008 between THE RYLAND GROUP, INC. and AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC as Rights Agent
EXHIBIT 4.1
dated as of
December 18, 2008
between
THE XXXXXX GROUP, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
as Rights Agent
TABLE OF CONTENTS
Section 1
|
Certain Definitions | 1 | ||||
Section 2
|
Appointment of Rights Agent | 6 | ||||
Section 3
|
Issuance of Rights Certificates | 7 | ||||
Section 4
|
Form of Rights Certificates | 8 | ||||
Section 5
|
Countersignature and Registration | 9 | ||||
Section 6
|
Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates | 10 | ||||
Section 7
|
Exercise of Rights; Purchase Price; Expiration Date of Rights | 10 | ||||
Section 8
|
Cancellation and Destruction of Rights Certificates | 12 | ||||
Section 9
|
Company Covenants Concerning Securities and Rights | 12 | ||||
Section 10
|
Record Date | 14 | ||||
Section 11
|
Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights | 14 | ||||
Section 12
|
Certificate of Adjusted Purchase Price or Number of Shares | 21 | ||||
Section 13
|
Fractional Rights and Fractional Shares | 21 | ||||
Section 14
|
Rights of Action | 23 | ||||
Section 15
|
Agreement of Rights Holders | 23 | ||||
Section 16
|
Rights Certificate Holder Not Deemed a Stockholder | 24 | ||||
Section 17
|
Concerning the Rights Agent | 24 | ||||
Section 18
|
Merger, Consolidation or Change of Name of Rights Agent | 25 | ||||
Section 19
|
Duties of Rights Agent | 26 | ||||
Section 20
|
Change of Rights Agent | 28 | ||||
Section 21
|
Issuance of New Rights Certificates | 29 | ||||
Section 22
|
Redemption | 29 | ||||
Section 23
|
Exchange | 30 | ||||
Section 24
|
Notice of Certain Events | 31 | ||||
Section 25
|
Notices | 31 | ||||
Section 26
|
Supplements and Amendments | 32 | ||||
Section 27
|
Successors | 33 | ||||
Section 28
|
Determinations and Actions by the Board | 33 |
i
Section 29
|
Benefits of this Agreement | 33 | ||||
Section 30
|
Severability | 34 | ||||
Section 31
|
Governing Law | 34 | ||||
Section 32
|
Counterparts | 34 | ||||
Section 33
|
Descriptive Headings | 34 |
EXHIBITS
| Exhibit A: | Form of Articles Supplementary of Series A Junior Participating Preferred Stock |
| Exhibit B: | Form of Rights Certificate |
| Exhibit C: | Summary of Rights |
ii
RIGHTS AGREEMENT, dated as of December 18, 2008 (the “Agreement”), between The Xxxxxx
Group, Inc., a Maryland corporation (the “Company”), and American Stock Transfer & Trsut
Company, LLC (the “Rights Agent”).
W I T N E S S E T H
WHEREAS, on December 17, 2008 (the “Rights Dividend Declaration Date”), the Board
authorized and declared a dividend distribution of one right (a “Right”) for each share of
common stock, par value $1.00 per share, of the Company (the “Common Stock”) outstanding at
the Close of Business (as hereinafter defined) on December 29, 2008 (the “Record Date”),
each Right initially representing the right to purchase one ten-thousandth of a share of Preferred
Stock (as hereinafter defined) of the Company, upon the terms and subject to the conditions
hereinafter set forth, and further authorized and directed the issuance of one Right (subject to
adjustment as provided herein) with respect to each share of Common Stock issued or delivered by
the Company after the Record Date but prior to the earlier of the Distribution Date (as hereinafter
defined) and the Expiration Date (as hereinafter defined) or as provided in Section 21.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereby
agree as follows:
Section 1 Certain Definitions
For purposes of this Agreement, the following terms shall have the meanings indicated:
(a) “Acquiring Person” shall mean any Person (other than the Company, any Related
Person or any Exempt Person) that has become, in itself or, together with all Affiliates and
Associates of such Person, the Beneficial Owner of 4.9% or more of the shares of Common Stock
then-outstanding, provided, however , that any Person who would otherwise qualify
as an Acquiring Person as of the Close of Business on the Record Date will not be deemed to be an
Acquiring Person for any purpose of this Agreement on and after such date unless and until such
time as such stockholder no longer qualifies as an Exempt Person, and provided,
further, that a Person will not be deemed to have become an Acquiring Person solely as a
result of (i) a reduction in the number of shares of Common Stock outstanding, (ii) the exercise of
any options, warrants, rights or similar interests (including restricted stock) granted by the
Company to its directors, officers and employees, (iii) any unilateral grant of any security by the
Company, or (iv) an Exempt Transaction, unless and until such time as such stockholder acquires the
beneficial ownership of one additional share of Common Stock. The Board shall not be required to
make any determination with respect to a potential Acquiring Person, including whether the
potential Acquiring Person is an Exempt Person, until five (5) Business Days after the date on
which all Board members first received notice of the change of beneficial ownership at issue.
Notwithstanding the foregoing, the Board may, in its sole discretion, determine that any Person
shall not be deemed to be an “Acquiring Person” for any purposes of this Agreement.
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(b) “Act” shall mean the Securities Act of 1933, as amended.
(c) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement, and to the extent not included within the foregoing clause of this
Section 1(c), shall also include, with respect to any Person, any other Person (whether or not a
Related Person or an Exempt Person) whose shares of Common Stock would be deemed constructively
owned by such first Person, owned by a single “entity” as defined in Section 1.382-3(a)(1) of the
Treasury Regulations, or otherwise aggregated with shares owned by such first Person pursuant to
the provisions of the Code, or any successor provision or replacement provision, and the Treasury
Regulations thereunder, provided, however, that a Person shall not be deemed to be
the Affiliate or Associate of another Person solely because either or both Persons are or were
directors of the Company.
(d) “Agreement” shall have the meaning set forth in the preamble of this Agreement.
(e) “Authorized Officer” shall mean the Chief Executive Officer, President, any Vice
President, the Treasurer or the Secretary of the Company.
(f) A Person shall be deemed the “Beneficial Owner” of, and to “beneficially
own” any securities:
(i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, warrants, options, or other
rights (in each case, other than upon exercise or exchange of the Rights); provided,
however, that a Person shall not be deemed the “Beneficial Owner” of, or to
“beneficially own” securities (including rights, options or warrants) which are convertible
or exchangeable into Common Stock until such time as the convertible or exchangeable securities are
exercised and converted or exchanged into Common Stock except to the extent the acquisition or
transfer of such rights, options or warrants would be treated as exercised on the date of its
acquisition or transfer under Section 1.382-4(d) of the Treasury Regulations; and, provided
further, however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own securities tendered pursuant to a tender or exchange offer made by such Person or
any of such Person’s Affiliates or Associates until such tendered securities are accepted for
purchase or exchange;
(ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has or shares the right to vote or dispose of, or has “beneficial ownership” of (as
defined under Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding (whether or not in writing), but only if
the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity”
under Section 1.382-3(a)(1) of the Treasury Regulations; or
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(iii) which any other person is the Beneficial Owner, if such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (whether or not in
writing) with such other Person (or any of such other Person’s Affiliates or Associates) with
respect to acquiring, holding, voting or disposing of any securities of the Company, but only if
the effect of such agreement, arrangement or understanding is to treat such Persons as an “entity”
under Section 1.382-3(a)(1) of the Treasury Regulations; provided, however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own” any security (A) if
such Person has the right to vote such security pursuant to an agreement, arrangement or
understanding (whether or not in writing) which (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or successor report), or (B)
if such beneficial ownership arises solely as a result of such Person’s status as a “clearing
agency,” as defined in Section 3(a)(23) of the Exchange Act; provided further,
however, that nothing in this Section 1(f) shall cause a Person engaged in business as an
underwriter of securities or member of a selling to group to be the Beneficial Owner of, or to
“beneficially own,” any securities acquired through such Person’s participation in good faith in an
underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition,
or such later date as the directors of the Company may determine in any specific case.
Notwithstanding anything herein to the contrary, to the extent not within the foregoing provisions
of this Section 1(f), a Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” or have “beneficial ownership” of, securities which such Person would be deemed
to constructively own or which otherwise would be aggregated with shares owned by such pursuant to
Section 382 of the Code, or any successor provision or replacement provision and the Treasury
Regulations thereunder.
(g) “Board” shall mean the Board of Directors of the Company.
(h) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the States of New York or New Jersey (or such other state in which the
principal office of the Rights Agent may be located) are authorized or obligated by law or
executive order to close.
(i) “Common Stock” shall have the meaning set forth in the preamble of this Agreement.
(j) “Close of Business” on any given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business Day, it shall
mean 5:00 P.M., New York City time, on the next succeeding Business Day.
(k) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(l) “Company” shall have the meaning set forth in the preamble of this Agreement.
(m) “Company’s Articles of Incorporation” shall mean the Articles of Incorporation of
the Company, as amended.
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(n) “Current Per Share Market Price” shall have the meaning set forth in Section
11(d)(i) or Section 11(d)(ii) hereof, as applicable.
(o) “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.
(p) “Distribution Date” shall mean the earliest of (i) the Close of Business on the
tenth Business Day after the Stock Acquisition Date or (ii) the Close of Business on the tenth
Business Day (or, unless the Distribution Date shall have previously occurred, such later date as
may be specified by the Board of Directors of the Company) after the commencement of a tender or
exchange offer by any Person (other than the Company, any Related Person or any Exempt Person), if
upon the consummation thereof such Person would be the Beneficial Owner of 4.9% or more of the
then-outstanding Common Stock.
(q) “Equivalent Preferred Stock” shall have the meaning set forth in Section 11(b)
hereof.
(r) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(s) “Exchange Ratio” shall have the meaning set forth in Section 23(a) hereof.
(t) “Exempt Person” shall mean (i) a Person whose Beneficial Ownership (together with
all Affiliates and Associates of such Person) of 4.9% or more of the then-outstanding Common Stock
would not, as determined by the Board in its sole discretion, jeopardize or endanger in any
material respect the availability to the Company of its Tax Benefits and (ii) any Person that
beneficially owns, as of the Record Date, 4.9% or more of the outstanding shares of Common Stock,
provided, however, that, with respect to clause (ii) of this paragraph, any such
Person shall only be deemed to be an Exempt Person for so long as it does not acquire one
additional share of Common Stock while it continues to own 4.9% or more of the shares of the then
outstanding Common Stock; and provided, further, that, with respect to clauses (i)
and (ii) of this paragraph, any Person shall cease to be an Exempt Person as of the date that such
Person ceases to beneficially own 4.9% or more of the shares of the then outstanding Common Stock.
Additionally, a Person shall cease to be an Exempt Person if the Board, in its sole discretion,
makes a contrary determination based on the potential effect of such Person’s Beneficial Ownership
(together with all Affiliates and Associates of such Person) with respect to the availability to
the Company of its Tax Benefits.
(u) “Exempt Transaction” shall mean any transaction that the Board determines, in its
sole discretion, is exempt, which determination shall be irrevocable.
(v) “Expiration Date” shall mean the earliest of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in Section 22 hereof, (iii) the time at which
the Rights are exchanged as provided in Section 23 hereof, (iv) the repeal of Section 382 of the
Code or any successor statute if the Board determines that this Agreement is no longer necessary
for the preservation of Tax Benefits, (v) the beginning of a taxable year of the Company to which
the Board determines that no Tax Benefits may be carried forward and (vi) December 18, 2009 if
Stockholder Approval has not been obtained.
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(w) “Final Expiration Date” shall be December 18, 2018.
(x) “NYSE” means The New York Stock Exchange.
(y) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, trust or other legal entity, group of persons
making a “coordinated acquisition” of shares or otherwise treated as an entity within the meaning
of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise, and includes any successor (by
merger or otherwise) of such individual or entity.
(z) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $1.00 per share, of the Company having the rights and preferences set forth in the
form of Articles Supplementary of Series A Junior Participating Preferred Stock attached hereto as
Exhibit A.
(aa) “Purchase Price” shall mean initially $90 per one ten-thousandth of a Preferred
Stock, subject to adjustment from time to time as provided in this Agreement.
(bb) “Record Date” shall have the meaning set forth in the recitals to this Agreement.
(cc) “Redemption Price” shall mean $0.001 per Right, subject to adjustment of the
Company to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof.
(dd) “Related Person” shall mean (i) any Subsidiary of the Company or (ii) any
employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any
entity holding shares of Common Stock for or pursuant to the terms of any such plan.
(ee) “Rights” shall have the meaning set forth in the recitals to this Agreement.
(ff) “Rights Agent” shall have the meaning set forth in the preamble of this
Agreement.
(gg) “Rights Certificates” shall mean certificates evidencing the Rights, in
substantially the form attached hereto as Exhibit B.
(hh) “Rights Dividend Declaration Date” shall have the meaning set forth in the
recitals to this Agreement.
(ii) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section
11(a)(iii) hereof.
(jj) “Securities Act” shall mean Securities Act of 1933, as amended.
(kk) “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.
(ll) “Stock Acquisition Date” shall mean the first date of public announcement by the
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Company or an Acquiring Person that an Acquiring Person has become such or such earlier date
as a majority of the Board shall determine the existence of an Acquiring Person.
(mm) “Stockholder Approval” shall mean the approval of this Agreement by the
affirmative vote of a majority of all the votes cast at a meeting at which a quorum is present, at
a meeting of stockholders of the Company duly held in accordance with the Company’s Articles of
Incorporation and applicable law.
(nn) “Subsidiary” shall mean, with reference to any Person, any corporation or other
legal entity of which a majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person, or otherwise controlled by such Person.
(oo) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii)
hereof.
(pp) “Summary of Rights” shall mean a copy of a summary of the terms of the Rights, in
substantially the form attached hereto as Exhibit C.
(qq) “Tax Benefits” shall mean the net operating loss carry-overs, capital loss
carry-overs, general business credit carry-overs, alternative minimum tax credit carry-overs and
foreign tax credit carry-overs, as well as any “net unrealized built-in loss” within the meaning of
Section 382, of the Company or any direct or indirect subsidiary thereof.
(rr) “Trading Day” shall mean 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.
(ss) “Treasury Regulations” shall mean final, temporary and proposed income tax
regulations promulgated under the Code, including any amendments thereto.
Section 2 Appointment of Rights Agent
The Company hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock Exchange governing
transfer agents and registrars. The Company may from time to time appoint such co-rights agents as
it may deem necessary or desirable. The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omission of any such co-rights agent. Prior to the appointment
of a co-rights agent, the specific duties and obligations of each such co-rights agents shall be
set forth in writing and delivered to the Rights Agent and the proposed co-rights agent. Any
actions which may be taken by the Rights Agent pursuant to the terms of this Agreement may be taken
by any such co-rights agent. To the extent that any co-rights agent takes any action pursuant to
this Agreement, such co-rights agent shall be entitled to all of the rights and protections of, and
subject to all of the applicable duties and obligations imposed upon, the Rights Agent pursuant to
the terms of this Agreement. The Rights Agent will have no duty to supervise, and in no event will
be liable for, the acts or omissions of any co-rights agent.
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Section 3 Issuance of Rights Certificates
(a) Until the Distribution Date, (i) the Rights shall be evidenced (subject to Section 3(b))
by the certificates representing the shares of Common Stock in the names of the record holders
thereof (which certificates representing such shares of Common Stock shall also be deemed to be
Rights Certificates), (ii) the Rights shall be transferable only in connection with the transfer of
the underlying shares of Common Stock, and (iii) the surrender for transfer of any certificates
representing such shares of Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the shares of Common Stock represented by
such certificates.
(b) On or as promptly as practicable after the Record Date, the Company shall send by first
class, postage prepaid mail, to each record holder of shares of 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 as
of such date, a copy of a Summary of Rights to Purchase Preferred Stock in substantially the form
attached as Exhibit C. With respect to certificates for Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with the Summary of Rights.
(c) Rights shall be issued by the Company in respect of all shares of Common Stock (other than
any shares of Common Stock that may be issued upon the exercise or exchange of any Right) issued or
delivered by the Company after the Record Date but prior to the earlier of the Distribution Date
and the Expiration Date, except as specially provided in Section 21 hereof, after the Distribution
Date. Certificates representing such shares of Common Stock shall have stamped on, impressed on,
printed on, written on, or otherwise affixed to them a legend in substantially the following form
or such similar legend as the Company may deem appropriate and is not inconsistent with the
provisions of this Agreement and as do not affect the rights, duties or responsibilities of the
Rights Agent, or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the shares of Common Stock may from time to time be listed or
quoted:
This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between The Xxxxxx Group, Inc. and American Stock Transfer &
Trust Company, LLC, dated as of December 18, 2008 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 Xxxxxx Group, Inc. The
Rights are not exercisable prior to the occurrence of certain events specified in the
Rights Agreement. Under certain circumstances, as set forth in the Rights Agreement, such
Rights may be redeemed, may be exchanged, may expire, may be amended, or may be evidenced
by separate certificates and no longer be evidenced by this certificate. The Xxxxxx Group,
Inc. shall mail to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances as set forth in the Rights Agreement, Rights that
are or were beneficially owned by an Acquiring Person or any Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) may become null and
void.
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(d) Any Rights Certificate issued pursuant to this Section 3 or Section 21 hereof that
represents Rights beneficially owned by an Acquiring Person or any of its Associates or Affiliates
and any Rights Certificate issued at any time upon the transfer of any Rights to an Acquiring
Person or any of its Associates or Affiliates or to any nominee of such Acquiring Person, Associate
or Affiliate and any Rights Certificate issued pursuant to Section 6 or 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to in this sentence,
shall be subject to and contain a legend in substantially the following form or such similar legend
as the Company may deem appropriate and is not inconsistent with the provisions of this Agreement
or as may be required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed:
The Rights represented by this Rights Certificate are or were beneficially owned by a
Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). This Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in Section
11(a)(ii) of the Rights Agreement.
(e) As promptly as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall send or cause to be sent (and the
Rights Agent will, if requested, and if provided with all necessary information, send), by first
class, insured, postage prepaid mail, to each record holder of shares of Common Stock, as of the
Close of Business on the Distribution Date (other than an Acquiring Person or any Associate or
Affiliate of an Acquiring Person), at the address of such holder shown on the records of the
Company, a Rights Certificate representing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. As of and after the Distribution Date, the Rights shall
be represented solely by such Rights Certificates. The Company shall promptly notify the Rights
Agent in writing upon the occurrence of the Distribution Date and, if such notification is given
orally, the Company shall confirm same in writing on or prior to the next Business Day. Until such
notice is received by the Rights Agent, the Rights Agent may presume conclusively that the
Distribution Date has not occurred.
(f) In the event that the Company purchases or otherwise acquires any shares after the Record
Date but prior to the Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock so purchased or acquired.
Section 4 Form of Rights Certificates
The Rights Certificates (and the form of election to purchase and the form of assignment to be
printed on the reverse thereof) shall each be substantially in the form attached hereto as
Exhibit B with such changes and 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 or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or transaction reporting system on which the Rights may from time to
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time be listed or quoted, or to conform to usage. Subject to the provisions of Section 21
hereof, the Rights Certificates, whenever distributed shall entitle the holders thereof to purchase
such number of one ten-thousandths of a share of Preferred Stock as is set forth therein at the
Purchase Price; provided, however, that the Purchase Price, the number and kind of
securities issuable upon exercise of each Right and the number of Rights outstanding shall be
subject to adjustments as provided in this Agreement.
Section 5 Countersignature and Registration
(a) The Rights Certificates shall be executed on behalf of the Company by any Authorized
Officer, either manually or by facsimile signature, and shall have affixed thereto the Company’s
seal or a facsimile thereof which shall be attested by any Authorized Officer, either manually or
by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the Company; and any
Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any such person was not
such an officer.
(b) Following the Distribution Date, upon receipt by the Rights Agent of written notice of the
occurrence of the Distribution Date pursuant to Section 3(e) hereof, a stockholder list and all
other relevant information referred to in Section 3(e) or as reasonably requested by the Rights
Agent, the Rights Agent shall keep, books for registration and transfer of the Rights Certificates
issued hereunder or cause to be kept, at its office or offices designated for such purposes and at
such other offices as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange or any
transaction reporting system on which the rights may from time to time be listed or quoted. Such
books shall show the names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and the date of each of
the Rights Certificates.
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| Section 6 | Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates |
(a) Subject to the provisions of Section 7(d) and Section 13 hereof, at any time after the
Close of Business on the Distribution Date, and prior to the Expiration Date, any Rights
Certificate(s) (other than Rights Certificates representing Rights that may have been exchanged
pursuant to Section 23 hereof) representing exercisable Rights may be transferred, split up,
combined or exchanged for another Rights Certificate(s), entitling the registered holder to
purchase a like number of one ten-thousandths of a share of Preferred Stock (or other securities,
as the case may be) as the Rights Certificate(s) surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any such Rights Certificate(s) must make such request in writing delivered
to the Rights Agent, and must surrender the Rights Certificate(s) to be transferred, split up,
combined or exchanged, with the forms of assignment and certificate contained therein duly
executed, at the office or offices of the Rights Agent designated for such purpose. The Rights
Certificates are transferable only on the registry books of the Rights Agent. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered holder shall have (i) completed and
signed the certificate contained in the form of assignment on the reverse side of such Rights
Certificate, (ii) provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner and the Affiliates and Associates of such Beneficial Owner (or former
Beneficial Owner) as the Company or the Rights Agent shall reasonably request and (iii) paid a sum
sufficient to cover any tax or charge that may be imposed in connection with any transfer, split
up, combination or exchange or Rights Certificates as required by Section 9(d) hereof. Thereupon
the Rights Agent shall countersign and deliver to the Person entitled thereto a Rights Certificate
or Rights Certificates, as the case may be, as so requested registered in such name or names as may
be designated by the surrendering registered holder. The Rights Agent shall promptly forward any
such sum collected by it to the Company or to such Person or Persons as the Company shall specify
by written notice. The Rights Agent shall have no duty or obligation unless and until it is
satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate, if mutilated, the Company
shall execute and deliver a new Rights Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Rights Certificate to the registered holder in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7 Exercise of Rights; Purchase Price; Expiration Date of Rights
(a) Except as otherwise provided herein, the Rights shall become exercisable on the
Distribution Date and prior to the Expiration Date, and thereafter the registered holder of any
Right Certificate may, subject to Section 11(a)(ii) and Section 23 hereof, exercise the Rights
evidenced thereby in whole or in part upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office
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or agency of the Rights Agent designated for such purpose, together with payment of the
Purchase Price (including any applicable tax or charge required to be paid by the holder of such
Rights Certificate in accordance with the provisions of Section 9(d)) hereof for each one
ten-thousandth of a share of Preferred Stock (or other securities, cash or assets, as the case may
be) as to which the Rights are exercised.
(b) Upon receipt of a Rights Certificate representing exercisable Rights with the form of
election to purchase and the certificate properly completed and duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal to any applicable
tax or charge required to be paid under Section 9(d) hereof by certified check, cashier’s check,
bank draft or money order payable to the order of the Company, the Rights Agent shall, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares) certificates representing the
total number of one ten-thousandths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes and directs its transfer agent to comply with all such requests) or
(B) if the Company shall have elected to deposit any shares of Preferred Stock issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one ten-thousandths of a share of Preferred Stock
as are to be purchased (and the Company hereby irrevocably authorizes and directs such depositary
agent to comply with all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be) cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be designated by such
holder, (iii) when appropriate, requisition from the Company or any transfer agent therefor of
certificates representing the number of equivalent shares to be issued in lieu of the issuance of
shares of Common Stock in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate, registered in such name or names as may
be designated by such holder, (v) when appropriate, requisition from the Company of the amount of
cash to be paid in lieu of the issuance of fractional shares in accordance with the provisions of
Section 13 hereof, and (vi) when appropriate, after receipt, deliver such cash to the registered
holder of such Rights Certificate.
(c) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, the Rights Agent shall prepare, execute and deliver a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised to the registered
holder of such Rights Certificate or to his duly authorized assigns, subject to the provisions of
Section 13 hereof.
(d) 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 any purported transfer,
split up, combination or exchange of any Rights Certificate pursuant to Section 6 or exercise or
assignment of a Rights Certificate as set forth in this Section 7 unless the registered holder of
such Rights Certificate shall have (i) duly and properly completed and signed the certificate
following the form of assignment or the form of election to purchase, as applicable, set forth on
the reverse side of the Rights Certificate surrendered for such transfer, split up, combination,
exchange, exercise or assignment and (ii) provided such additional evidence of the
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identity of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights
evidenced thereby and Affiliates and Associates thereof as the Company or the Rights Agent may
reasonably request.
Section 8 Cancellation and Destruction of Rights Certificates
All Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9 Company Covenants Concerning Securities and Rights
(a) The Company covenants and agrees that it shall cause to be reserved, authorized for
issuance and kept available out of its authorized and unissued shares of Preferred Stock, and/or
other securities, a number of shares of Preferred Stock (or any other security of the Company as
may be applicable at the time of exercise) that shall be sufficient to permit the exercise in full
of all outstanding Rights in accordance with Section 7.
(b) The Company covenants and agrees so long as the shares of Preferred Stock (and, following
the occurrence of any Person becoming an Acquiring Person, shares of Common Stock and/or other
securities) issuable upon the exercise of the Rights may be listed on any national securities
exchange, or quoted on Nasdaq, it shall endeavor to cause, from and after such time as the Rights
become exercisable, all securities reserved for issuance upon the exercise of Rights to be listed
on such exchange, or quoted on the Nasdaq, upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees it will take all such actions as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of any Person becoming an
acquiring Person shares of Common Stock and/or other securities) delivered upon exercise of Rights,
at the time of delivery of the certificates for such securities, shall be (subject to payment of
the Purchase Price) duly authorized, validly issued, fully paid and nonassessable securities.
(d) The Company covenants and agrees it will pay when due and payable any and all federal or
state taxes and charges that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates representing securities issued upon the exercise of Rights;
provided, however, that the Company shall not be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Rights Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts representing
securities issued upon the exercise of Rights in a name other than that of, the registered holder
of the
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Rights Certificate evidencing Rights surrendered for exercise, or to issue or deliver any
certificates or depositary receipts representing securities issued upon the exercise of any Rights
until any such tax or charge has been paid (any such tax or charge being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax or charge is due.
(e) If the Company determines that registration under the Securities Act is required, then the
Company shall use commercially reasonable efforts (i) to file, as soon as practicable after the
Distribution Date, on an appropriate form, 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 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 shall 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 exceed 90 days, the exercisability of the Rights in
order to prepare and file such registration statement and to permit it to become effective or to
qualify the rights, the exercise thereof or the issuance of shares of Preferred Stock, Common
Stock, or other securities upon the exercise thereof under state securities or “blue sky” laws.
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. The Company shall notify the Rights Agent in
writing whenever it makes a public announcement pursuant to this Section 9(e) and give the Rights
Agent a copy of such announcement. In addition, if the Company determines that a registration
statement or other document should be filed under the Securities Act or any state securities laws
following the Distribution Date, the Company may temporarily suspend the exercisability of the
Rights, for a period of time not to exceed 90 days, in each relevant jurisdiction until such time
as a registration statement has been declared effective or any such other document filed and, if
required, approved, and, 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 anything in
this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite registration or qualification in such jurisdiction has not been effected or the exercise
of the Rights is not permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the contrary, after the later of the Stock
Acquisition Date and the Distribution Date, the Company shall not take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably foreseeable that such action
shall eliminate or otherwise diminish the benefits intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other securities of the Company and/or
pay cash pursuant to Sections 7, 11, 13 or 23 it shall make all arrangements necessary so that such
other securities and/or cash are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.
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Section 10 Record Date
Each Person in whose name any certificate for a number of one ten-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of such
shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights Certificate
representing such Rights was duly surrendered and payment of the Purchase Price (and all applicable
taxes and 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 for shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) are closed, such Person shall be
deemed to have become the record holder of such securities on, and such certificate shall be dated,
the next succeeding Business Day on which the transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be entitled
to any rights of a holder of any security of the Company with respect to shares for which the
Rights are or may be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11 Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights
The Purchase Price, the number of shares of Preferred Stock or other securities or property
purchasable upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the Record Date (A) declare a
dividend on the shares of Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding shares of Preferred Stock, (C) combine the outstanding shares of Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the shares of Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, as the case may be, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such date and at a time
when the transfer books of the Company for the shares of Preferred Stock were open, the holder
would have owned upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon exercise of one Right.
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(ii) Subject to Section 23 of this Agreement and except as otherwise provided in this Section
11(a)(ii) and Section 11(a)(iii), in the event that any Person becomes an Acquiring Person, each
holder of a Right shall thereafter have the right to receive, upon exercise thereof at a price
equal to the then-current Purchase Price, in accordance with the terms of this Agreement and in
lieu of shares of Preferred Stock, such number of shares of Common Stock (or at the option of the
Company, such number of one ten-thousandths of a share of Preferred Stock) as shall equal the
result obtained by (x) multiplying the then-current Purchase Price by the number of one
ten-thousandths of a share of Preferred Stock for which a Right is then exercisable and dividing
that product by (y) 50% of the Current Per Share Market Price of the Company’s Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of such event;
provided, however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon exercise of a Right shall thereafter be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Agreement to the contrary, however, from and after the time
(the “invalidation time”) when any Person first becomes an Acquiring Person, any Rights
that are beneficially owned by (A) any Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (B) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who becomes a transferee after the invalidation time or (C) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who became a transferee prior to or concurrently with the
invalidation time pursuant to either (1) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement, arrangement or
understanding, written or otherwise, regarding the transferred Rights or (2) a transfer that the
Board has determined is part of a plan, arrangement or understanding, written or otherwise, which
has the purpose or effect of avoiding the provisions of this paragraph, and subsequent transferees
of such Persons, shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any provision of this
Agreement. The Company will use commercially reasonable efforts to ensure that the provisions of
this Section 11(a)(ii) are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder. From and after the
invalidation time, no Right Certificates shall be issued pursuant to Section 3 or Section 6 hereof
that represents Rights that are or have become void pursuant to the provisions of this paragraph,
and any Right Certificates delivered to the Rights Agent that represents Rights that are or have
become void pursuant to the provisions of this paragraph shall be cancelled.
(iii) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value equal to the Current Per Share
Market Price of a share of Common Stock, as the case may be. In the event that there shall be an
insufficient number of Common Stock authorized but unissued (and unreserved) to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph (ii), the Board shall, with
respect to such deficiency, to the extent permitted by applicable law and any material agreements
then in effect to which the Company is a party (A) determine the excess of (x) the value of the
shares of Common Stock issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the “Current Value”) over (y) the
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then-current Purchase Price multiplied by the number of one ten-thousandths of shares of
Preferred Stock for which a Right was exercisable immediately prior to the time that the Acquiring
Person became such (such excess, the “Spread”), and (B) with respect to each Right (other
than Rights which have become void pursuant to Section 11(a)(ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with subparagraph (ii) upon
exercise of the Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in
such Purchase Price, (3) shares of Preferred Stock or other equity securities of the Company
(including, without limitation, shares or fractions of shares of preferred stock which, by virtue
of having dividend, voting and liquidation rights substantially comparable to those of the shares
of Common Stock, are deemed in good faith by the Board to have substantially the same value as the
shares of Common Stock (such shares of preferred stock and shares or fractions of shares of
preferred stock are hereinafter referred to as “Common Stock equivalents”) (4) debt
securities of the Company, (5) other assets or (6) any combination of the foregoing, having a value
which, when added to the value of the shares of Common Stock actually issued upon exercise of such
Right, shall have an aggregate value equal to the Current Value (less the amount of any reduction
in such Purchase Price), where such aggregate value has been determined by the Board (upon the
advice of a nationally recognized investment banking firm selected by the Board in good faith);
provided, however, if the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the date that the Acquiring
Person became such (the “Section 11(a)(ii) Trigger Date”), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any material agreements then in
effect to which the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent available), and
then, if necessary, such number or fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread.
If within the thirty (30) day period referred to above the Board shall determine in good faith that
it is likely that sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board so elects, such thirty (30) day period may
be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended, is hereinafter called the
“Substitution Period”). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 11(a)(ii) hereof and the last sentence of this Section 11(a)(iii)
hereof, that such action shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to be made
pursuant to such second sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.
(b) If the Company fixes a record date for the issuance of rights, options or warrants to all
holders of shares of Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase shares of Preferred Stock (or securities
having equivalent rights, privileges and preferences as the shares of Preferred Stock (for
- 16 -
purposes of this Section 11(b), “Equivalent Preferred Stock”)) or securities
convertible into shares of Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or Equivalent Preferred Stock) less than the
Current Per Share Market Price of the shares of Preferred Stock (determined pursuant to Section
11(d)) on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so to be offered)
would purchase at such Current Per Share Market Price and the denominator of which is 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 Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock issuable
upon exercise of one Right. In case such subscription price may be paid in a consideration part or
all of which is in a form other than cash, the value of such consideration shall be as determined
in good faith by the Board, whose determination shall be described in a written statement filed
with the Rights Agent. Shares of Preferred Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) If the Company fixes a record date for the making of a distribution to all holders of
shares of Preferred Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a
dividend payable in shares of Preferred Stock) or subscription 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 is the Current Per Share Market Price of the
shares of Preferred Stock (as determined pursuant to Section 11(d)) on such record date or, if
earlier, the date on which shares of Preferred Stock begin to trade on an ex-dividend or when
issued basis for such distribution, less the fair market value (as determined in good faith by the
Board, whose determination shall be described in a written statement filed with the Rights Agent)
of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed or of
such subscription rights, options or warrants applicable to one share of Preferred Stock, and the
denominator of which is such Current Per Share Market Price of the shares of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right but less than the aggregate par value of the shares of capital stock issuable
upon exercise of one Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed.
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(d) (i) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of any security (a “Security” for purposes of this Section 11(d)(i) only) on any
date shall be deemed to be the average of the daily closing prices per share of a share of the
Common Stock for the 30 consecutive Trading Days immediately prior to, but not including, such
date; provided, however, that in the event that the Current Per Share Market Price
of the Security is determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares of such Security or
securities convertible into such shares (other than the Rights) or (B) any subdivision, combination
or reclassification of such Security, and prior to the expiration of 30 Trading Days after, but not
including, 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 Per Share
Market Price shall be appropriately adjusted to take into account ex-dividend trading or to reflect
the current per share market price per share equivalent of such Security. 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 Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security is not listed or admitted
to trading on any national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq
or such other system then in use, or, if on any such date Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board. If the Security is not publicly held
or not so listed or traded, or is not the subject of available bid and asked quotes, the Current
Per Share Market Price of such Security shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed with the Rights
Agent.
(ii) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of shares of the Preferred Stock shall be determined in accordance with the method set
forth above in Section 11(d)(i) other than the last sentence thereof. If the Current Per Share
Market Price of Preferred Stock cannot be determined in the manner provided above, it shall be
conclusively deemed to be an amount equal to the current per share market price of the shares of
Common Stock multiplied by ten thousand (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or similar transactions relating to
the shares of Common Stock occurring after the date of this Agreement). If neither the Common Stock
nor the Preferred Stock are publicly held or so listed or traded, or the subject of available bid
and asked quotes, “Current Per Share Market Price” of the Preferred Stock shall mean the
fair value per share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent. For all purposes of this Agreement, the
current per share market price of one ten-thousandth of a Preferred Share will be equal to the
current per share market price of one Preferred Share divided by ten thousand.
- 18 -
(e) Except as set forth below, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a share of Preferred Stock or one ten-thousandth of a share of a Common Stock or
other security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right
thereafter exercised becomes entitled to receive any securities of the Company other than shares of
Preferred Stock, thereafter the number and/or kind of such other securities so receivable upon
exercise of any Right (and/or the Purchase Price in respect 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 shares of Preferred Stock (and the Purchase Price in respect thereof) contained
in this Section 11, and the provisions of Sections 7, 9, 10 and 13 with respect to the shares of
Preferred Stock (and the Purchase Price in respect thereof) shall apply on like terms to any such
other securities (and the Purchase Price in respect thereof).
(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one ten-thousandths of a share of Preferred Stock issuable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in Section 11(i), upon each
adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding
immediately prior to the making of such adjustment shall evidence the right to purchase, at the
adjusted Purchase Price, that number of one ten-thousandths of a share of Preferred Stock
(calculated to the nearest one one-millionth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one ten-thousandths of a share of Preferred Stock issuable upon
exercise of a Right immediately prior to such adjustment of the Purchase Price by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in substitution for any adjustment in the number of one ten-thousandths
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
ten-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one hundred-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
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adjustment to be made. The Company shall also, as promptly as practicable, notify the Rights
Agent in writing of same pursuant to Section 9(e) hereof and give the Rights Agent a copy of such
announcement. Such record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but if the Rights Certificates have been issued, such record date shall be at least 10
calendar days later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to the provision of
Section 13, the additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders are entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed, and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or
kind of securities issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price and the number and kind of
securities which were expressed in the initial Rights Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
one ten-thousandth of the then par value, if any, of the shares of Preferred Stock or below the
then par value, if any, of any other securities of the Company 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
shares of Preferred Stock or such other securities, as the case may be, at such adjusted Purchase
Price.
(l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date the number of one ten-thousandths of a share of Preferred Stock or other securities of
the Company, if any, issuable upon such exercise over and above the number of one ten-thousandths
of a share of Preferred Stock or other securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company delivers to such holder a due xxxx or other appropriate
instrument evidencing such holder’s right to receive such additional shares of Preferred Stock or
other securities upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its good faith judgment the Board determines to be
necessary or advisable in order that any (i) consolidation or subdivision of the shares of
Preferred Stock, (ii) issuance wholly for cash of shares of Preferred Stock at less
- 20 -
than the Current Per Share Market Price therefor, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its shares of Preferred Stock is
not taxable to such stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company
at any time after the Record Date and prior to the Distribution Date (i) pays a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a
smaller number of shares or (iv) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock following any such event
equals the result obtained by multiplying the number of Rights associated with each share of Common
Stock immediately prior to such event by a fraction the numerator of which is the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the event and the
denominator of which is the total number of shares of Common Stock, as the case may be, outstanding
immediately following the occurrence of such event. The adjustments provided for in this Section
11(n) shall be made successively whenever such a dividend is paid or such a subdivision,
combination or reclassification is effected.
Section 12 Certificate of Adjusted Purchase Price or Number of Shares
Whenever an adjustment is made or any event affecting the Rights or their exercisability
(including without limitation an event which causes Rights to become null and void) occurs as
provided in Section 11, the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts and calculations accounting for such adjustment or
describing such event, (b) file with the Rights Agent, and with each transfer agent for the shares
of Preferred Stock and the shares of Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have received such certificate,
provided, however, that the Rights Agent will not be entitled to such protection in
cases of bad faith or willful misconduct.
Section 13 Fractional Rights and Fractional Shares
(a) The Company shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company shall
pay to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of one Right. For purposes of this Section 13(a), the current market value of one
Right is the closing price of the Rights for the Trading Day immediately prior to the
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date on which such fractional Rights would have been otherwise issuable. The closing price for
any Trading 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 Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as reported by the
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, such market maker to be selected by the Board. If the
Rights are not publicly held or are not so listed or traded, or are not the subject of available
bid and asked quotes, the current market value of one Right shall mean the fair value thereof as
determined in good faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent.
(b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one ten-thousandth of a share
of Preferred Stock). Fractions of Preferred Stock in integral multiples of one ten-thousandth of
such Preferred Stock may, in the sole discretion of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement provides that the holders of such depositary receipts have all the
rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one ten-thousandth of a share of Preferred Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market value of one
ten-thousandth of a share of Preferred Stock. For purposes of this Section 13(b), the current
market value of one ten-thousandth of a share of Preferred Stock shall be one ten-thousandth of the
closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise; provided,
however, that if the closing price of the shares of the Preferred Stock cannot be so
determined, the closing price of the shares of the Preferred Stock for such Trading Day shall be
conclusively deemed to be an amount equal to the closing price of the shares of Common Stock for
such Trading Day multiplied by ten thousand (as such number may be appropriately adjusted to
reflect events such as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Stock shares occurring after the date of this Agreement).
(c) Following the occurrence of any Person becoming an Acquiring Person, the Company shall not
be required to issue fractions of shares of Common Stock, as the case may be, upon exercise or
exchange of the Rights or to distribute certificates which evidence fractional shares of Common
Stock, as the case may be. In lieu of issuing any such fractional securities, the Company may pay
to any Person to whom or which such fractional securities would otherwise
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be issuable an amount in cash equal to the same fraction of the current market value of one
such security. For purposes of this Section 13(c), the current market value of one share of Common
Stock, or other security issuable upon the exercise or exchange of Rights shall be the closing
price thereof (as determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately
prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Rights expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 13.
Section 14 Rights of Action
(a) All rights of action in respect of this Agreement, excepting the rights of action given to
the Rights Agent hereunder, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of shares of Common
Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of
the shares of Common Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the shares of 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 Rights Certificate in the manner provided in such Rights Certificate
and in this Agreement. Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental regulatory, self-regulatory or
administrative agency or commission, or any statute, rule, regulation, or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company shall use
commercially reasonable efforts to have any such injunction, order, judgment, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 15 Agreement of Rights Holders
Every holder of a Right 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 shall be transferable only in connection with
the transfer of shares of Common Stock;
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(b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed and accompanied by a properly executed instrument of
transfer with the appropriate forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated Common Stock share
certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and
(d) such holder expressly waives any right to receive any fractional Rights and any fractional
securities upon exercise or exchange of a Right, except as otherwise provided in Section 13.
Section 16 Rights Certificate Holder Not Deemed a Stockholder
No holder, of any Rights Certificate, by means of such possession, shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of one ten-thousandths of a
share of Preferred Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights Certificate, by means of
such possession, any of the rights of a stockholder of the Company including any right to vote on
any matter submitted to stockholders at any meeting thereof, including the election of directors,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate have been exercised in accordance with the provisions of this Agreement.
Section 17 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 other disbursements incurred in the preparation, administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, cost or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross
negligence, bad faith or willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction), for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this Agreement and the
performance of its duties and responsibilities and the exercise of its rights hereunder, including
the costs and expenses of defending against any claim of liability arising therefrom, directly or
indirectly. The costs and expenses of enforcing this right
- 24 -
of indemnification will also be paid by the Company. The provisions of this Section 17 shall
survive the exercise, exchange, redemption or expiration of the Rights, the resignation,
replacement or removal of the Rights Agent and the termination of this Agreement.
(b) The Rights Agent may conclusively rely on, and will be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in connection with, its
acceptance or administration of this Agreement and the exercise and performance of its duties and
responsibilities and the exercise of its rights hereunder, in reliance upon any Rights Certificate
or certificate evidencing shares of Preferred Stock, Common Stock or other securities of the
Company, or any instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth in Section 19.
(c) Notwithstanding anything in this Agreement to the contrary, in no event will the Rights
Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
Section 18 Merger, Consolidation or Change of Name of Rights Agent
(a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent is a party, will be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 20 hereof. If at the time such successor
Rights Agent shall succeed to the agency created by this Agreement any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and if at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) If at any time the name of the Rights Agent changes and at such time any of the Rights
Certificates have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so countersigned; and if at
that time any of the Rights Certificates have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in the Rights Certificates and in this
Agreement.
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Section 19 Duties of Rights Agent
The Rights Agent undertakes to perform the duties and obligations expressly imposed by this
Agreement (and no implied duties) upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with competent legal counsel (who may be legal counsel for
the Company), and the advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted by it in accordance with the content of such advice or
opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of the Current Per Share 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 any Authorized
Officer and delivered to the Rights Agent; and such certificate, pursuant to its terms, shall be
full and complete authorization and protection to the Rights Agent for any action taken or suffered
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 (which gross negligence, bad faith or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction).
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates (except its countersignature
thereof) 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 will have no liability in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant contained in this Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Sections 11, 12, 22 or 23 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of Rights evidenced by
Rights 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 Rights
Certificate or as to whether any shares of Common Stock or Preferred Stock shall, when so issued,
be validly authorized and issued, fully paid and nonassessable.
- 26 -
(f) The Company agrees that it shall 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 and the exercise of the rights hereunder from any person reasonably
believed by the Rights Agent to be one of the Authorized Officers, and to apply to such Authorized
Officers for advice or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with instructions of any such
Authorized Officer or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business Days after the date
any Authorized Officer of the Company actually receives such application, unless any such
Authorized Officer shall have consented in writing to an earlier date) unless, prior to taking any
such action (or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other 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 (through its directors, officers or employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed to certify the holder
is not an Acquiring Person (or an Affiliate or Associate thereof) or a transferee thereof, the
Rights Agent shall not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
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(k) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.
(l) The Rights Agent will not be required to take notice or be deemed to have notice of any
fact, event or determination (including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person, Affiliate or Associate) under
this Agreement unless and until the Rights Agent is specifically notified in writing by the Company
of such fact, event or determination.
(m) The provisions of this Section 19 shall survive the exercise, exchange, redemption or
expiration of the Rights, the resignation, replacement or removal of the Rights Agent and the
termination of this Agreement.
Section 20 Change of Rights Agent
The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ written notice mailed to the Company, and to each
transfer agent of the shares of Common Stock and Preferred Stock known to the Rights Agent,
respectively, by registered or certified mail, and, if such resignation occurs after the
Distribution Date, to the registered holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ written
notice, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the shares of Common Stock and the Preferred Stock, by registered or certified
mail, and, if such removal occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall, in its sole discretion, appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be (a) a legal business entity organized
and doing business under the laws of the United States or of the State of New York or of any other
state of the United States, in good standing, which is authorized under such laws to exercise
corporate trust, stock transfer or shareholder services powers 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 legal business entity described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the predecessor
- 28 -
Rights Agent and each transfer agent of the shares of Common Stock and the Preferred Stock,
and, if such appointment occurs after the Distribution Date, mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice provided for in this
Section 20, however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 21 Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be
approved by the Board to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement. In addition, in connection with the
issuance or sale by the Company of shares of Common Stock following the Distribution Date and prior
to the Expiration Date, the Company (a) shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or convertible into,
shares of Common Stock and (b) may, in any other case, if deemed necessary or appropriate by the
Board, issue Rights Certificates representing the appropriate number of Rights as would have been
issued in respect of such shares of Common Stock if they had been issued or sold prior to the
Distribution Date, as appropriately adjusted as provided herein as if they had been so issued or
sold; provided, however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, in its good faith judgment the Board determines that the issuance of such
Rights Certificate could have a material adverse tax consequence to the Company or to the Person to
whom or which such Rights Certificate otherwise would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 22 Redemption
(a) The Board may, at any time prior to such time as any Person first becomes an Acquiring
Person and has not been determined to be an Exempt Person by the Board, redeem all but not less
than all the then-outstanding Rights at 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 Company may, at its option, pay the Redemption Price in cash,
securities or any other form of consideration deemed appropriate by the Board.
(b) Immediately upon the effectiveness of the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held without interest thereon. Promptly after the effectiveness of the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each holder’s last address as
it appears upon the registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the shares of Common Stock; provided,
however, that the failure to give, or any defect in, any such notice will not affect the
validity of
- 29 -
the Redemption of the Rights. 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
shall state the method by which the payment of the Redemption Price shall be made.
Section 23 Exchange
(a) The Board may, at its option, at any time after any Person first becomes an Acquiring
Person and has not been determined to be an Exempt Person by the Board, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that have not become
effective or that have become void pursuant to the provisions of Section 11(a)(ii) hereof) for
shares of Common Stock, as the case may be, at an exchange ratio of one share of Common Stock, as
the case may be, (or ten-thousandth of a share of Preferred Stock) per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof (such amount per Right being hereinafter referred to as the “Exchange Ratio”. 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 ordering the exchange of any
Rights pursuant to subsection (a) of this Section 23 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock, as the case may be, equal
to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of the Rights so exchanged
at their last addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which the exchange of
the shares of Common Stock, for Rights shall be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) 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 (and
unreserved) to permit an exchange of Rights as contemplated in accordance with this Section 23, 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 shares of Preferred Stock or
fraction thereof (or equivalent preferred shares as such term is defined in Section 11(b)) such
that the Current Per Share Market Price of one share of Preferred Stock (or equivalent preferred
share) multiplied by such number or fraction is equal to the Current Per Share Market Price as of
the date of such exchange.
- 30 -
Section 24 Notice of Certain Events
(a) If the Company proposes to (i) pay any dividend payable in stock of any class to the
holders of shares of Preferred Stock or to make any other distribution to the holders of shares of
Preferred Stock (other than a regular periodic cash dividend), (ii) offer to the holders of shares
of Preferred Stock rights, options, warrants or any similar instrument to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of outstanding shares of Preferred Stock), (iv)
effect any consolidation, merger or statutory share exchange into or with any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company or (vi) declare or pay any
dividend on the shares of Common Stock payable in shares of Common Stock, respectively, or to
effect a subdivision, combination or reclassification of the Common Stock as the case may be, then,
in each such case, the Company shall give to the Rights Agent and, to the extent possible, to each
holder of a Rights Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock dividend, distribution
or offering of rights, warrants, options or any similar instrument or the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation therein by the holders of the shares
of Preferred Stock, if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least ten (10) days prior to the record date
for determining holders of the shares of Common Stock and/or Preferred Stock for purposes of such
action, and in the case of any such other action covered by clause (i) or (ii) above at least ten
(10) days prior to the date of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever is the earlier.
(b) If a Stock Acquisition Date occurs, then the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights.
Section 25 Notices
(a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made
(a) immediately, if made by personal delivery to the party to be notified, (b) on the fifth (5th)
day if sent by first-class mail, postage prepaid, (c) the next Business Day if by nationally
recognized overnight courier or (d) upon confirmation, if transmission by facsimile combined with a
phone call to the Company notifying it of such transmission, all addressed (until another address
is filed in writing by the Company with the Rights) as follows:
- 31 -
The Xxxxxx Group, Inc.
00000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
00000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Phone: 000-000-0000
Facsimile: 000-000-0000
Phone: 000-000-0000
(b) Subject to the provisions of Section 20, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made (a) immediately, if made by personal delivery to the
party to be notified, (b) on the fifth (5th) day if sent by first-class mail, postage prepaid, (c)
the next Business Day if by nationally recognized overnight courier or (d) upon confirmation, if
transmission by facsimile combined with a phone call to the Rights Agent notifying it of such
transmission, all addressed (until another address is filed in writing by the Rights Agent with the
Company) as follows:
American Stock Transfer & Trust Company, LLC
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx
Attention: Client Administrator
Facsimile: 000-000-0000
Phone: 000-000-0000
Facsimile: 000-000-0000
Phone: 000-000-0000
(c) Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26 Supplements and Amendments
Prior to the Distribution Date, the Company may in its sole and absolute discretion, 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 Rights, any such supplement or amendment to
be evidenced by writing signed by the Company and the Rights Agent. From and after the time at
which the Rights cease to be redeemable pursuant to Section 22, 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 in order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to amend or supplement the
provisions hereunder in any manner which the Company may deem necessary or desirable;
provided, however, that no such supplement or amendment shall adversely affect the
interests of the holders of Rights (other than an Acquiring Person or any Affiliate or Associate of
- 32 -
an Acquiring Person), and no such amendment may cause the Rights again to become redeemable or
cause this Rights Agreement again to become amendable other than in accordance with this sentence.
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 26, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything herein to the contrary,
the Rights Agent shall not be obligated to enter into any supplement or amendment that affects the
Rights Agent’s own right, duties, obligations or immunities under this Agreement.
Section 27 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 28 Determinations and Actions by the Board
(a) For all purposes of this Agreement, any calculation of the number of shares of Common
Stock or any other class of capital 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) of the General Rules and Regulations under the Exchange Act or the provisions
of Section 382 of the Code or any successor or replacement provision.
(b) The Board shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations
and calculations deemed necessary or advisable for the administration of this Agreement (including
without limitation a determination to redeem or not redeem the Rights or amend this Agreement).
(c) All such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the Board, or any of
the directors on the Board to any liability to any person, including without limitation the Rights
Agent and the holders of the Rights. Unless otherwise notified, the Rights Agent shall always be
entitled to assume that the Board acted in good faith and the Rights Agent shall be fully protected
and shall incur no liability in reliance thereon.
Section 29 Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of 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
- 33 -
benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of shares of Common Stock).
Section 30 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; provided, however,
that nothing contained in this Section 30 will affect the ability of the Company under the
provisions of Section 26 to supplement or amend this Agreement to replace such invalid, void or
unenforceable term, provision, covenant or restriction with a legal, valid and enforceable term,
provision, covenant or restriction.
Section 31 Governing Law
This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be
a contract made under the laws of the State of Maryland and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State.
Section 32 Counterparts
This Agreement may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 33 Descriptive Headings
Descriptive headings of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.
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- 34 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as
of the day and year first above written.
| THE XXXXXX GROUP, INC. | ||||
| /s/ Xxxxxxx X. Xxxxxx
|
||||
Title: Senior Vice President, General Counsel and Secretary |
||||
| AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC | ||||
| /s/ Xxxxx Xxxxxxxxx
|
||||
| Title: Vice President |
Signature page to Rights Agreement
- 35 -
Exhibit A
FORM OF ARTICLES SUPPLEMENTARY
OF
THE XXXXXX GROUP, INC.
OF
THE XXXXXX GROUP, INC.
The Xxxxxx Group, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the
Maryland State Department of Assessments and Taxation that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by
Section 2-208 of the Maryland General Corporation Law and Article SIXTH of the charter of the
Corporation, the Board of Directors has duly reclassified 10,000 shares of unissued common stock,
par value $1.00 per share (the “Common Stock”), of the Corporation into 10,000 shares of preferred
stock, par value $1.00 per share (the “Preferred Stock”).
SECOND: The reclassification increases the number of shares classified as Preferred Stock
from no shares immediately prior to the reclassification to 10,000 shares immediately after the
reclassification. The reclassification decreases the number of shares classified as Common Stock
from 200,000,000 shares immediately prior to the reclassification to 199,990,000 shares immediately
after the reclassification.
THIRD: Pursuant to authority expressly vested in the Board of Directors of the Corporation by
Article SIXTH of the Charter of the Corporation, the Board of Directors has duly designated the
10,000 shares of the Preferred Stock as Series A Junior Participating Preferred Stock, par value
$1.00 per share, of the Corporation and has provided for the issuance of such series.
FOURTH: The terms of the Series A Junior Participating Preferred Stock as set by the Board of
Directors, including preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of redemption, are as follows:
| 1. | The shares of such series will be designated as Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock is 10,000. Such number of shares may be increased or decreased by resolution of the Board; provided, however, that no decrease will reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation and convertible into Series A Preferred Stock. | |
| 2. | (a) Subject to the rights of the holders of any shares of any series of Preferred Stock ranking prior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, and of any other junior stock, will be entitled |
A-1
to receive, when, as and if declared by the Board out of funds legally
available for the purpose, dividends payable in cash (except as otherwise
provided below) on such dates as are from time to time established for the
payment of dividends on the Common Stock (each such date being referred to
herein as a “Dividend Payment Date”), commencing on the first Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Preferred Stock (the “First Dividend Payment Date”), in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, the greater of (i) $1 and (ii) ten thousand
(10,000) times the aggregate per share amount of all cash dividends, and ten
thousand (10,000) times the aggregate per share amount (payable in kind) of
all non-cash dividends, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the First
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event that the Corporation at any
time (i) declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivides the outstanding shares of Common
Stock, (iii) combines the outstanding shares of Common Stock into a smaller
number of shares or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such
case and regardless of whether any shares of Series A Preferred Stock are then
issued or outstanding, the amount to which holders of shares of Series A
Preferred Stock would otherwise be entitled immediately prior to such event
pursuant to this paragraph 2(a) will be correspondingly adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation will declare a dividend on the Series A Preferred Stock as
provided in paragraph 2(a) immediately after it declares a dividend on the
Common Stock (other than a dividend payable in shares of Common Stock). Each
such dividend on the Series A Preferred Stock will be payable immediately
prior to the time at which the related dividend on the Common Stock is
payable.
(c) Dividends will accrue, and be cumulative, on outstanding shares of Series
A Preferred Stock from the Dividend Payment Date next preceding the date of
issue of such shares, unless (i) the date of issue of such shares is prior to
the record date for the First Dividend Payment Date, in which case dividends
on such shares will accrue from the date of the first issuance of a share of
Series A Preferred Stock or (ii) the date of issue is a Dividend
A-2
Payment Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a dividend
and before such Dividend Payment Date, in either of which events such
dividends will accrue, and be cumulative, from such Dividend Payment Date.
Accrued but unpaid dividends will cumulate from the applicable Dividend
Payment Date but will not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares will be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date will be not more
than 60 calendar days prior to the date fixed for the payment thereof.
| 3. | The holders of shares of Series A Preferred Stock shall have the following voting rights: |
(a) Subject to the provision for adjustment hereinafter set forth and except
as otherwise provided in the Articles of Incorporation, as amended, or
required by law, each share of Series A Preferred Stock shall entitle the
holder thereof to 10,000 votes, on all matters upon which the holders of the
Common Stock of the Corporation are entitled to vote. In the event the
Corporation shall at any time after the Record Date declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in the Articles of Incorporation, as
amended, or in any other Articles Supplementary creating a series of Preferred
Stock or any similar stock, and except as otherwise required by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their
A-3
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
| 4. | (a) Whenever dividends or other dividends or distributions payable on the Series A Preferred Stock are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding have been paid in full, the Corporation will not: |
(i) Declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) (“Junior Stock”) to the shares
of Series A Preferred Stock;
(ii) Declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) (“Parity Stock”) with the
shares of Series A Preferred Stock, except dividends paid ratably on
the shares of Series A Preferred Stock and all such Parity Stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) Redeem, purchase or otherwise acquire for consideration shares
of any Junior Stock; provided, however, that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
Junior Stock in exchange for shares of any other Junior Stock of the
Corporation; or
(iv) Redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of Parity Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board) to all holders of such shares
upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, may determine in good faith will result
in fair and equitable treatment among the respective series or
classes.
(b) The Corporation will not permit any majority-owned subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph 4(a),
purchase or otherwise acquire such shares at such time and in such manner.
A-4
| 5. | Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares will upon their cancellation become authorized but unissued shares of Common Stock. | |
| 6. | Upon any liquidation, dissolution or winding up of the Corporation, no distribution will be made (a) to the holders of shares of Junior Stock unless, prior thereto, the holders of shares of Series A Preferred Stock have received an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; provided, however, that the holders of shares of Series A Preferred Stock will be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to a minimum per share liquidation payment of $10,000 but will be entitled to an aggregate per share liquidation payment of 10,000 times the payment made per share of Common Stock or (b) to the holders of shares of Parity Stock, except distributions made ratably on the shares of Series A Preferred Stock and all such Parity Stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a smaller number of shares or (iv) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred Stock are then issued or outstanding, the aggregate amount to which each holder of shares of Series A Preferred Stock would otherwise be entitled immediately prior to such event pursuant to this paragraph 6 will be correspondingly adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. | |
| 7. | In the event that the Corporation enters into any consolidation, merger, statutory share exchange, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then, in each such case, each share of Series A Preferred Stock will at the same time be similarly exchanged for or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to ten thousand (10,000) times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation at |
A-5
| any time (a) declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (b) subdivides the outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a smaller number of shares or (d) issues any shares of its capital stock in a reclassification of the outstanding shares of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing or surviving corporation), then, in each such case and regardless of whether any shares of Series A Preferred Stock are then issued or outstanding, the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock will be correspondingly adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. | ||
| 8. | The shares of Series A Preferred Stock are not redeemable. | |
| 9. | The Series A Preferred Stock rank, with respect to the payment of dividends and the distribution of assets, junior to all other series of the Corporation’s Preferred Stock, unless the terms of such series shall so provide. | |
| 10. | Series A Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. |
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A-6
IN WITNESS WHEREOF, The Xxxxxx Group, Inc., has caused these presents to be signed in its name
and on its behalf by its Chief Executive Officer and witnessed by its Secretary on .
| WITNESS: | THE XXXXXX GROUP, INC. | |||||
| By: | ||||||
| Title: President and Chief Executive Officer | ||||||
THE UNDERSIGNED, R. Xxxx Xxxxxx, the Chief Executive Officer of The Xxxxxx Group, Inc., who
executed on behalf of the Corporation the Articles Supplementary of which this certificate is made
apart, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles
Supplementary to be the corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
A-7
Exhibit B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER DECEMBER 18, 2018 OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT,
RIGHTS THAT ARE OR WERE 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) OR A TRANSFEREE THEREOF
SHALL BECOME NULL AND VOID AND NO LONGER TRANSFERABLE.
RIGHTS CERTIFICATE
THE XXXXXX GROUP, 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, (the “Rights Agreement”), by and between The
Xxxxxx Group, Inc., a Maryland corporation (the “Company”), and American Stock Transfer & Trust
Company, LLC (the “Rights Agent”), dated as of December 18, 2008, 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. (New York time) on the Expiration Date (as such term is defined in the Rights Agreement)
at the office or offices of the Rights Agent designated for such purpose, one ten-thousandth of a
fully paid nonassessable share of Series A Junior Participating Preferred Stock, par value $1.00
per share (the “Preferred Shares”), of the Company, at a purchase price of $90 per one
ten-thousandth of a Preferred Share (the “Purchase Price”), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. If
this Rights Certificate is exercised in part, the holder will be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of whole Rights not
exercised. The number of Rights evidenced by this Rights Certificate (and the number of one
ten-thousandths of a Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of the date of the
Rights Agreement, based on the Preferred Shares as constituted at such date. Terms used herein with
initial capital letters and not defined herein are used herein with the meanings ascribed thereto
in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of
shares of Preferred Stock (or other securities, as the case may be) which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to adjustment upon the
occurrence of certain events.
B-1
This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of the Rights under the circumstances specified in
the Rights Agreement. Copies of the Rights Agreement are on file at the principal executive offices
of the Company and can be obtained from the Company without charge upon written request therefor.
Pursuant to the Rights Agreement, from and after the occurrence of any Person becoming an
Acquiring Person, any Rights that are Beneficially Owned by (i) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who becomes a transferee after the occurrence of any Person becoming
an Acquiring Person or (iii) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with any Person becoming an Acquiring
Person pursuant to either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (b) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has the purpose or effect of
avoiding certain provisions of the Rights Agreement, and subsequent transferees of any of such
Persons, will be void without any further action and any holder of such Rights will thereafter have
no rights whatsoever with respect to such Rights under any provision of the Rights Agreement. From
and after the occurrence of any Person becoming an Acquiring Person, no Rights Certificate will be
issued that represents Rights that are or have become void pursuant to the provisions of the Rights
Agreement, and any Rights Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of the Rights Agreement will be canceled.
This Rights Certificate, with or without other Rights Certificates, may be exchanged for
another Rights Certificate or Rights Certificates entitling the holder to purchase a like number of
one ten-thousandths of a Preferred Share (or other securities, as the case may be) as the Rights
Certificate or Rights Certificates surrendered entitled such holder (or former holder in the case
of a transfer) to purchase, upon presentation and surrender hereof at the office or offices of the
Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the
related Certificate duly executed.
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 $0.001 per Right or may be
exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the Company,
as provided therein.
The Company is not required to issue fractions of Preferred Shares (other than fractions which
are integral multiples of one ten-thousandth of a Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or other securities issuable, as the case
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may be, upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing such
fractional Preferred Shares or other Securities, the Company may make a cash payment, as provided
in the Rights Agreement.
No holder of this Rights Certificate, as such, will 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 upon the exercise of the Right or Rights represented
hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate have been exercised in accordance with the provisions of the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose until it has been
countersigned by the Rights Agent.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of .
| THE XXXXXX GROUP, INC. | ||||
Title: Senior Vice President, General Counsel and Secretary |
||||
| Countersigned | ||||
| AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC | ||||
| Title: | ||||
Signature page to Rights Certificate
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Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint Attorney, to transfer the within Rights Certificate on the books
of the within-named Company, with full power of substitution.
Dated : ,
Signature(s) Guaranteed:
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate are not being sold, assigned, transferred,
split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it did not acquire the
Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ,
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Form of Reverse Side of Rights Certificate — continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate)
To The Xxxxxx Group, Inc.:
The undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the one ten-thousandths of a Preferred Share or other securities
issuable upon the exercise of such 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 is not all the Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance remaining of such Rights will be registered in the name of and
delivered to:
Please insert social security or other identifying number:
(Please print name and address)
Dated: ,
Signature(s) Guaranteed:
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement).
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate 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 Person (as such
terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it did not acquire the
Rights evidenced by this Rights Certificate from any Person who is, was, or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ,
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NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, such Assignment or Election to Purchase
will not be honored.
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Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS PLAN)
AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS
On December 17, 2008, the Board of Directors (the “Board”) of The Xxxxxx Group, Inc., a
Maryland corporation (the “Company”), adopted a rights plan and declared a dividend of one
preferred share purchase right for each outstanding share of common stock. The dividend is payable
to our stockholders of record as of December 29, 2008. The terms of the rights and the rights plan
are set forth in a Rights Agreement, by and between us and American Stock Transfer & Trust Company,
LLC, as Rights Agent, dated as of December 18, 2008 (the “Rights Plan”).
This summary of rights provides only a general description of the Rights Plan, and thus,
should be read together with the entire Rights Plan, which is incorporated into this summary by
reference. All capitalized terms used herein but not defined herein shall have the meanings
ascribed to such terms in the Rights Plan. Upon written request, the Company will provide a copy of
the Rights Plan free of charge to any of its stockholders.
Our Board of Directors adopted the Rights Plan in an effort to protect stockholder value by
attempting to diminish the risk that our ability to use our net operating losses and unrealized
losses (collectively, the “NOLs”) to reduce potential future federal income tax obligations may
become substantially limited. We have experienced and continue to experience substantial operating
losses, including realized losses for tax purposes from sales of inventory and land previously
written down for financial statement purposes, which would produce NOLs. Under the Internal
Revenue Code and regulations promulgated by the U.S. Treasury Department, we may “carry forward”
these NOLs in certain circumstances to offset any current and future taxable income and thus reduce
our federal income tax liability, subject to certain requirements and restrictions. To the extent
that the NOLs do not otherwise become limited, we believe that we will be able to carry forward a
significant amount of NOLs, and therefore these NOLs could be a substantial asset to us. However,
if we experience an “Ownership Change,” as defined in Section 382 of the Internal Revenue Code, our
ability to use the NOLs, including NOLs later arising from sales of land and inventory previously
written down, will be substantially limited, and the timing of the usage of the NOLs could be
substantially delayed, which could therefore significantly impair the value of that asset.
The Rights Plan is intended to act as a deterrent to any person or group acquiring 4.9% or
more of our outstanding common stock (an “Acquiring Person”) without the approval of our Board of
Directors. Stockholders who own 4.9% or more of our outstanding common stock as of the close of
business on December 29, 2008 will not trigger the Rights Plan so long as they do
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not (i) acquire any additional shares of common stock or (ii) fall under 4.9% ownership of
common stock and then re-acquire 4.9% or more of the common stock of the Company. The Rights Plan
does not exempt any future acquisitions of common stock by such persons. Any rights held by an
Acquiring Person are void and may not be exercised. Our Board of Directors may, in its sole
discretion, exempt any person or group from being deemed an Acquiring Person for purposes of the
Rights Plan.
The Rights. Our Board authorized the issuance of one right per each outstanding share of our
common stock payable to our stockholders of record as of December 29, 2008. Subject to the terms,
provisions and conditions of the Rights Plan, if the rights become exercisable, each right would
initially represent the right to purchase from us one ten-thousandth of a share of our Series A
Junior Participating Preferred Stock (the “Series A Preferred Stock”) for a purchase price of
$90.00 (the “Purchase Price”). If issued, each fractional share of preferred stock would give the
stockholder approximately the same dividend, voting and liquidation rights as does one share of our
common stock. However, prior to exercise, a right does not give its holder any rights as a
stockholder of the Company, including without limitation any dividend, voting or liquidation
rights.
Exercisability. The rights will not be exercisable until the earlier of (i) 10 business days
after a public announcement by us that a person or group has become an Acquiring Person and (ii) 10
business days after the commencement of a tender or exchange offer by a person or group for 4.9% or
more of our common stock.
We refer to the date that the rights become exercisable as the “Distribution Date.” Until the
Distribution Date, our common stock certificates will evidence the rights and will contain a
notation to that effect. Any transfer of shares of common stock prior to the Distribution Date will
constitute a transfer of the associated rights. After the Distribution Date, the rights may be
transferred other than in connection with the transfer of the underlying shares of common stock
unless and until our Board has determined not to affect an exchange pursuant to the Rights Plan (as
described below).
After the Distribution Date, each holder of a Right, other than Rights beneficially owned by
the Acquiring Person (which will thereupon become void), will thereafter have the right to receive
upon exercise of a Right and payment of the Purchase Price, that number of shares of common stock
having a market value of two times the Purchase Price.
Exchange. After the Distribution Date, the Board may exchange the Rights (other than rights
owned by an Acquiring Person which will have become void), in whole or in part, at an exchange
ratio of one share of common stock, or a fractional share of Series A Preferred Stock (or of a
share of a similar class or series of the Company’s preferred stock having similar rights,
preferences and privileges) of equivalent value, per Right (subject to adjustment).
Stockholder Approval. The Company intends to submit the Rights Plan for stockholder approval
(“Stockholder Approval”) at a meeting of stockholders of the Company.
Expiration. The rights and the Rights Plan will expire on the earliest of (i) December 18,
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2018, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii)
the time at which the Rights are exchanged pursuant to the Rights Agreement, (iv) the repeal of
Section 382 of the Code or any successor statute if the Board determines that the Rights Agreement
is no longer necessary for the preservation of Tax Benefits, (v) the beginning of a taxable year of
the Company to which the Board determines that no Tax Benefits may be carried forward and (vi)
December 18, 2009 if Stockholder Approval has not been obtained.
Redemption. At any time prior to the time an Acquiring Person becomes such, the Board may
redeem the Rights in whole, but not in part, at a price of $0.001 per Right (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. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
Anti-Dilution Provisions. Our Board may adjust the purchase price of the preferred shares, the
number of preferred shares issuable and the number of outstanding rights to prevent dilution that
may occur as a result of certain events, including among others, a stock dividend, a stock split or
a reclassification of the preferred shares or our common stock. No adjustments to the purchase
price of less than 1% will be made.
Amendments. Before the Distribution Date, our Board may amend or supplement the Rights Plan
without the consent of the holders of the Rights. After the Distribution Date, our Board may amend
or supplement the Rights Plan only to cure an ambiguity, to alter time period provisions, to
correct inconsistent provisions, or to make any additional changes to the Rights Plan, but only to
the extent that those changes do not impair or adversely affect any rights holder and do not result
in the rights again becoming redeemable, and no such amendment may cause the Rights again to become
redeemable or cause this Rights Agreement again to become amendable other than in accordance with
this sentence.
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