EXBIBIT 10.27
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 19, 1997
AS AMENDED AS OF NOVEMBER 5, 1998
BY AND BETWEEN
BUILDING MATERIALS HOLDING CORPORATION
AND
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
AS RIGHTS AGENT
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 Certain Definitions.................................. 2
2 Appointment of Rights Agent.......................... 7
3 Issuance of Right Certificates....................... 8
4 Form of Right Certificates........................... 10
5 Countersignature and Registration.................... 10
6 Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates................................... 11
7 Exercise of Rights................................... 12
8 Cancellation and Destruction of Right
Certificates......................................... 14
9 Reservation and Availability of Capital
Stock................................................ 15
10 Securities Record Date............................... 16
11 Adjustment of Exercise Price, Number of
Shares Issuable Upon Exercise of Rights
or Number of Rights.................................. 16
12 Certificate of Adjusted Exercise Price
or Number of Shares Issuable
Upon Exercise of Rights.............................. 23
13 Consolidation, Merger, or Sale or Transfer
of Assets or Earning Power........................... 23
14 Fractional Rights and Fractional Shares.............. 26
15 Rights of Action..................................... 27
16 Agreement of Right Holders........................... 28
17 Right Holder and Right Certificate
Holder Not Deemed a Stockholder...................... 28
(i)
TABLE OF CONTENTS
(CONTINUED)
18 Concerning the Rights Agent.......................... 29
19 Merger or Consolidation or Change of
Name of Rights Agent................................. 29
20 Duties of Rights Agent............................... 30
21 Change of Rights Agent............................... 32
22 Issuance of New Right Certificates................... 33
23 Redemption of Rights................................. 33
24 Exchange of Rights................................... 34
25 Certain Cash Tender Offers........................... 36
26 Notice of Certain Events............................. 38
27 Notices.............................................. 39
28 Supplements and Amendments........................... 40
29 Certain Covenants.................................... 40
30 Successors........................................... 41
31 Benefits of this Agreement........................... 41
32 Severability......................................... 41
33 Governing Law........................................ 41
34 Counterparts......................................... 41
35 Descriptive Headings................................. 42
(ii)
TABLE OF EXHIBITS
Exhibit A -- Form of Certificate of Designation
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of the Rights
(iii)
TABLE OF DEFINED TERMS
TERM DEFINED PAGE SECTION
------------ ---- -------
Adjustment Shares 18 11(a)(ii)
Affiliate 2 1(a)
Agreement 1 Introduction
Associate 2 1(a)
Beneficially Own 2 1(b)
Beneficial Owner 2 1(b)
Business Day 3 1(c)
Cash Tender Offer Proposal 3 1(d)
Close of Business 3 1(e)
Closing Price 4 1(f)
Common Share 4 1(g)
Common Share Equivalent 18 11(a)(iii)
Company (Building Materials Holding Corporation) 1 Introduction
Company (following a Section 13(a) Event) 25 13(a)(iii)
Current Market Price 4 1(h)
Distribution Date 8 3(a)
Exchange Act 5 1(j)
Exchange Ratio 35 24(a)
Exercise Price 13 7(c)
Expiration Date 5 1(l)
Fair Offer 37 25(b)
Fairness Opinion 36 25(a)
(iv)
TABLE OF DEFINED TERMS
(CONTINUED)
TERM DEFINED PAGE SECTION
------------ ---- -------
NASDAQ 4 1(f)
Person 6 1(m)
Preferred Share 6 1(n)
Preferred Share Equivalent 18 11(b)
Proposal Date 37 25(a)
Prospective Offeror 3 1(d)
Record Date 1 Recital
Redemption Date 6 1(p)
Redemption Price 34 23(a)
Resolution 36 25(a)
Right 1 Recital
Rights Agent l Introduction
Section 11(a)(ii) Event 17 11(a)(ii)
Section 13(a) Event 24 13(a)
Securities Act 6 1(t)
Special Meeting 36 25(a)
Subsidiary 6 1(u)
Surviving Person 24 13(a)
Trading Day 6 1(v)
Unavailable Adjustment Shares 18 11(a)(iii)
Unavailable Exchange Shares 36 24(c)
Voting Share 6 1(w)
15% Ownership Date 7 1(x)
15% Stockholder 7 1(y)
(v)
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") is made and entered into as of
the 19th day of September, 1997, as amended as of November 5, 1998, by and
between Building Materials Holding Corporation, a Delaware corporation (the
"Company"), and American Stock Transfer and Trust Company (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company, which dividend is
payable on October 2, 1997 (the "Record Date") to the holders of record of
Common Shares as of the Close of Business (as hereinafter defined) on such
date;
WHEREAS, the Board of Directors of the Company has further authorized and
directed the issuance of one (subject to adjustment of such number as provided
in this Agreement) Right for (A) each Common Share that shall be outstanding
at any time after the Record Date and prior to the earliest of the date of the
first Section 11(a)(ii) Event, the date of the first Section 13(a) Event, the
Redemption Date or the Expiration Date (as such terms are hereinafter
defined), and (B) each Common Share that shall be issued by the Company at any
time on or after the earlier of the date of the first Section 11(a)(ii) Event
or the date of the first Section 13(a) Event and prior to the earlier of the
Redemption Date or the Expiration Date pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the
first Section 11(a)(ii) Event or the date of the first Section 13(a) Event,
unless the Board of Directors shall provide otherwise at the time of the
issuance or grant of such conversion rights, exchange rights, rights (other
than Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein, the Company
desires to appoint the Rights Agent to act on behalf of the Company for the
benefit of the holders of Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements set forth herein, and for the benefit of the holders of Rights, the
parties hereto hereby agree as follows:
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Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated below:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly,
for purposes of Section 13(d) of the Exchange Act and Rule 13d-3
promulgated under the Exchange Act, in each case as in effect on the
date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right
is exercisable immediately, or only after the passage of time,
compliance with regulatory requirements, the fulfillment of a
condition, or otherwise) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options, or
otherwise, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender offer or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
(iii) any securities that such Person or any such Person's
Affiliates or Associates has the right to vote, alone or in concert
with others, pursuant to any agreement, arrangement or understanding,
provided that a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a
revocable proxy given to such Person or any of such Person's
Affiliates or Associates in response to a public proxy solicitation
made pursuant to and in accordance with the applicable rules and
regulations of the Exchange Act, and (B) is not also then reportable
on Schedule 13D under the Exchange Act (or any comparable or
successor report);
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(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other
than voting pursuant to a revocable proxy as described in the proviso
to Section 1(b)(iii) hereof) or disposing of any securities of the
Company; and
(v) on any day on or after the Distribution Date, all Rights
that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of such
acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(d) "Cash Tender Offer Proposal" shall mean a written proposal delivered
to the Company by any Person (a "Prospective Offeror"), which proposal:
(i) is for a tender offer for any and all of the outstanding
Voting Shares held by any Person other than such Prospective Offeror
or its Affiliates or Associates for cash at the same price;
(ii) states that such Prospective Offeror has obtained firm
written financing commitments from recognized institutional financing
sources, and/or has on hand cash or cash equivalents, for the full
amount of all financing necessary to consummate the acquisition of
Voting Shares described in such Cash Tender Offer Proposal and is
accompanied by reasonable evidence of the foregoing; and
(iii) contains the written agreement of the Prospective Offeror
to pay (or share with any other Prospective Offeror) the Company's
costs of any Special Meeting (as such term is defined in Section 25
hereof), other than the Company's costs of preparing and mailing
proxy material for its own solicitation.
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(e) "Close of Business" on any given date shall mean 5:00 o'clock p.m.,
New York time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 o'clock p.m., New York time, on the next
succeeding Business Day.
(f) "Closing Price" of a stock or other security on any day shall be the
last sale price, regular way, per share of such stock or unit of such other
security on such day 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 such stock or other 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 such stock or other
security is listed or admitted to trading or, if such stock or other security
is not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use or, if on any such date such stock or other
security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker that makes a
market in such stock or other security and that is selected by the Board of
Directors of the Company.
(g) "Common Share" shall mean one share of the Common Stock, par value
$.001 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of the class of common
stock of such Person having the greatest voting power per share or, if such
Person is a Subsidiary of another Person, one Common Share of the Person that
ultimately controls such Person.
(h) "Current Market Price" per share of any stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of
such stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question;
provided, however, that if any event shall have caused the Closing Price on
any Trading Day during such 30-day period not to be fully comparable with the
Closing Price on the date in question (or, if no Closing Price is available on
the date in question, on the Trading Day
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immediately preceding the date in question), then each such noncomparable
Closing Price so used shall be appropriately adjusted by the Board of
Directors in order to make the Closing Price on each Trading Day during the
period used for the determination of the Current Market Price fully comparable
with the Closing Price on such date in question (or, if applicable, the
immediately preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other security that is not publicly held or so listed or
traded, and "Current Market Price" of any other property, shall mean the fair
value per share of such stock or unit of such other security, or the fair
value of such other property, respectively, as determined in good faith by the
Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors shall in good
faith determine appropriate, which determination shall be described in a
statement filed by the Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it in Section
3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(l) "Expiration Date" shall mean October 1, 2007.
(m) "Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(n) "Preferred Share" shall mean one share of the Series C Junior
Participating Cumulative Preferred Stock, par value $.001 per share, of the
Company, which shall have the rights and preferences set forth in the
Company's Restated Certificate of Incorporation in the form attached hereto as
Exhibit A.
(o) "Record Date" shall have the meaning ascribed to it in the recitals
hereto.
(p) "Redemption Date" shall mean the date of the action of the Board of
Directors directing the Company to redeem the Rights pursuant to Section 23(a)
hereof or exchange the Rights pursuant to Section 24(a) hereof.
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(q) "Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.
(r) "Section 11(a)(ii) Event" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(s) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "Subsidiary" of any Person shall mean any corporation or other Person
of which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(v) "Trading Day" shall mean, as to any stock or other security, a day on
which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(w) "Voting Share" shall mean (i) a Common Share and (ii) any other share
of capital stock of the Company entitled to vote generally in the election of
directors or entitled to vote together with the Common Shares in respect of
any merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up. References in this Agreement
to a percentage or portion of the outstanding Voting Shares shall be deemed a
reference to the percentage or portion of the total votes entitled to be cast
by the holders of the outstanding Voting Shares.
(x) "15% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or
a 15% Stockholder containing the facts by virtue of which a Person has become
a 15% Stockholder.
(y) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person,hereafter acquires Beneficial
Ownership of, in the aggregate, in one or more transactions, a number of
Voting Shares of the Company equal to 1% or more of the Voting Shares then
outstanding and thereupon or thereafter Beneficially Owns 15% or more of the
Voting Shares of the
6
Company then outstanding; provided, however, that the term "15% Stockholder"
shall not include: (i) the Company, any wholly owned Subsidiary of the
Company, any employee benefit plan of the Company or of a Subsidiary of the
Company, or any Person holding Voting Shares for or pursuant to the terms of
any such employee benefit plan; or (ii) any Person if such Person would not
otherwise be a 15% Stockholder but for a reduction in the number of
outstanding Voting Shares resulting from a stock repurchase program or other
similar plan of the Company or from a self tender offer of the Company, which
plan or tender offer commenced on or after the date hereof, provided, however,
that the term "15% Stockholder" shall include such Person from and after the
first date upon which (A) such Person, since the date of the commencement of
such plan or tender offer, shall have acquired Beneficial Ownership of, in the
aggregate,in one or more transactions, a number of Voting Shares of the
Company equal to 1% or more of the Voting Shares of the Company then
outstanding and (B) such Person, together with all Affiliates and Associates
of such Person, shall Beneficially Own 15% or more of the Voting Shares of the
Company then outstanding. In calculating the percentage of the outstanding
Voting Shares that are Beneficially Owned by a Person for purposes of this
subsection (aa), Voting Shares that are Beneficially Owned by such Person
shall be deemed outstanding, and Voting Shares that are not Beneficially Owned
by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights (other
than Rights), warrants or options shall not be deemed outstanding.
Notwithstanding the foregoing, if the Board of Directors determines that a
Person that would otherwise be a 15% Stockholder pursuant to the foregoing
provisions of this Section 1(y) and Section 1(b) hereof has become such
inadvertently, and such Person (i) notifies the Board of Directors of such
status and (ii) as promptly as practicable thereafter, either divests a
sufficient number of Voting Shares so that such Person would no longer be a
15% Stockholder, or causes any other circumstance, such as the existence of an
agreement respecting Voting Shares, to be eliminated such that such Person
would no longer be a 15% Stockholder as defined pursuant to this Section 1(y)
and 1(b), or enters into such other agreement or arrangement as the Board of
Directors may approve, then such Person shall not be deemed to be a 15%
Stockholder for any purposes of this Agreement.
Any determination made by the Board of Directors as to whether any Person
is or is not a 15% Stockholder shall be conclusive and binding upon all
holders of Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for
7
the Company and the holders of Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof, that
is the earliest of (i) the tenth Business Day (or such later day as shall be
designated by the Board of Directors Directors) following the date of the
commencement of, or the first public announcement of the intent of any Person
(other than the Company, any wholly owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or
any Person holding Common Shares for or pursuant to the terms of any such
employee benefit plan) to commence, a tender offer or exchange offer (other
than a Fair Offer, as defined in Section 25 hereof), the consummation of which
would cause any Person to become a 15% Stockholder, (ii) the date of the first
Section 11(a) (ii) Event or (iii) the date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each
of such certificates shall be the record holder of the Rights represented
thereby and (iii) the Rights shall be transferable only in connection with the
transfer of Common Shares. Until the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, the surrender for transfer of such
certificates for Common Shares shall also constitute the surrender for
transfer of the Rights represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close
of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate substantially in the form of
Exhibit B hereto representing one Right for each Common Share so held. From
and after the Distribution Date, the Rights shall be represented solely by
such Right Certificates and may only be transferred by the transfer of such
Right Certificates, and the holders of such Right Certificates, as listed in
the records of the Company or any transfer agent or registrar for such Rights,
shall be the record holders of such Rights.
8
(d) As soon as practicable after the Record Date, the Company shall send
a copy of a Summary of the Rights in substantially the form attached hereto as
Exhibit C by first-class, postage-prepaid mail to each record holder of Common
Shares as of the Close of Business on the Record Date at the address of such
holder shown on the records of the Company.
(e) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle the
holder hereof to certain rights as set forth in the Rights
Agreement dated as of September 19, 1997 by and between the
Corporation and American Stock Transfer and Trust Company, as
Rights Agent (the "Rights Agreement"), the terms and
conditions of which are hereby incorporated herein by
reference and a copy of which is on file at the principal
executive offices of the Corporation. Under certain
circumstances specified in the Rights Agreement, such Rights
will be represented by separate certificates and will no
longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights
beneficially owned by certain persons may become null and
void. The Corporation will mail to the record holder of this
certificate a copy of the Rights Agreement without charge
promptly following receipt of a written request therefor.
(f) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant
to the terms of the Rights Agreement dated as of September 19,
1997 by and between the Corporation and American Stock
Transfer and Trust Company, as Rights Agent.
9
(g) In the event that at any time on or after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Expiration Date, the
Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the
first Section 1l(a)(ii) Event or the date of the first Section 13(a) Event,
then, unless the Board of Directors of the Company shall have provided
otherwise at the time of the issuance or grant of such conversion rights,
exchange rights, rights (other than Rights), warrants or options, the Rights
Agent shall, as soon as practicable after the date of such event, send by
first-class, postage-prepaid mail to the record holder of such Common Shares,
at the address of such holder as shown on the records of the Company, a Right
Certificate substantially in the form of Exhibit B hereto representing one
Right for each Common Share so issued.
(h) Notwithstanding the foregoing provisions of this Section 3, the
Rights Agent shall not send any Right Certificate to any 15% Stockholder or
any of its Affiliates or Associates or to any Person if the Rights held by
such Person are Beneficially Owned by a 15% Stockholder or any of its
Affiliates or Associates. Any determination made by the Board of Directors as
to whether any Common Shares are or were Beneficially Owned at any time by a
15% Stockholder or an Affiliate or Associate of a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates and the
form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and
if issued, shall be substantially the same as Exhibit B hereto, and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company issuable upon exercise of the Rights
may from time to time be listed, or to conform to usage. Subject to Section 22
hereof, Right Certificates, whenever issued, that are issued in respect of
Common Shares that were issued and outstanding as of the Close of Business on
the Distribution Date, shall be dated as of the Distribution Date.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
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(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any Assistant Secretary, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless 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 Right Certificates had not ceased to be such
officer of the Company. Any Right Certificate may be signed on behalf of the
Company by any person who at the actual date of such execution shall be a
proper officer of the Company to sign such Right Certificate, even though such
person was not such an officer at the date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept at its principal offices books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of
Rights represented on its face by each Right Certificate and the date of each
Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES: MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or
more Right Certificates representing the same aggregate number of Rights as
the Right Certificates surrendered. Any registered holder desiring to
transfer, split up, combine or exchange one or more Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed. Thereupon, the Rights Agent shall
countersign and deliver to the person
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entitled thereto one or more Right Certificates, as so requested. The Company
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of such Right Certificate if mutilated, the Company shall issue
and deliver to the Rights Agent for delivery to the record holder of such
Right Certificate a new Right Certificate of like tenor in lieu of such lost,
stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any
Person if such Right Certificate represents, or would represent when held by
such Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Sections 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution
Date and prior to the Close of Business on the earlier of the Redemption Date
or the Expiration Date, the registered holder of any Right Certificate may
exercise the Rights represented thereby in whole or in part upon surrender of
such Right Certificate, with the form of election to purchase, including
certificate, on the reverse side thereof completed and duly executed, with
signature guaranteed, to the Rights Agent at the office of the Rights Agent at
00 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, together with payment of
the Exercise Price for each Right exercised. Upon the exercise of an
exercisable Right and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share (or, following the occurrence of a Section 11(a)(ii) Event or
a Section 13(a) Event, Common Shares and/or other securities).
12
(c) The Exercise Price for the exercise of each Right shall initially be
$33.33 and shall be payable in lawful money of the United States of America in
accordance with Section 7(f) hereof. The Exercise Price and the number of
Preferred Shares (or, following the occurrence of a Section ll(a)(ii) Event or
a Section 13(a) Event, Common Shares and/or other securities) to be acquired
upon exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 7(e), 11 and 13 hereof and the other provisions of this
Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the earlier of the date of the first Section 11(a)(ii) Event or the date
of the first Section 13(a) Event, any Rights that are or were Beneficially
Owned by a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder
at any time on or after the Distribution Date shall be null and void, and for
all purposes of this Agreement such Rights shall thereafter be deemed not to
be outstanding, and any holder of such Rights (whether or not such holder is a
15% Stockholder or an Affiliate or Associate of a 15% Stockholder) shall
thereafter have no right to exercise or exchange such Rights.
(e) Prior to the Distribution Date, if the Board of Directors shall have
determined that such action adequately protects the interests of the holders
of Rights, the Company may, in its discretion, substitute for all or any
portion of the Preferred Shares that would otherwise be issuable (after the
Close of Business on the Distribution Date) upon the exercise of each Right
and payment of the Exercise Price, (i) cash, (ii) other equity securities of
the Company, (iii) debt securities of the Company, (iv) other property or (v)
any combination of the foregoing, in each case having an aggregate Current
Market Price equal to the aggregate Current Market Price of the Preferred
Shares for which substitution is made. Subject to Section 7(d) hereof, in the
event that the Company takes any action pursuant to this Section 7(e), such
action shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase, including certificate, completed and
duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or
cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from the transfer agent
13
of the Preferred Shares (or, following the occurrence of a Section 11(a)(ii)
Event or a Section 13(a) Event, Common Shares and/or securities), certificates
for the number of Preferred Shares (or such other securities) to be purchased,
and the Company hereby irrevocably authorizes such transfer agent to comply
with all such requests, and/or, as provided in Section 14 hereof, requisition
from the depositary agent described therein depositary receipts representing
such number of one-hundredths of a Preferred Share (or such other securities)
as are to be purchased (in which case certificates for the Preferred Shares
(or such other securities) represented by such receipts shall be deposited by
the transfer agent with such depositary agent) and the Company hereby directs
such depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional Preferred Shares (or such other securities) in accordance with
Section 14 hereof, (iii) after receipt of such certificates, depositary
receipts or cash, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of
such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act
and any applicable securities law of any jurisdiction the Preferred Shares to
be issued pursuant to the exercise of the Rights; provided, however, that
nothing contained in this Section 7 shall relieve the Company of its
obligations under Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights represented thereby, a new Right Certificate
representing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to such holder's duly authorized assigns, subject to the provisions of
Section 14 hereof.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as
14
expressly permitted by 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 Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity
securities (or out of its authorized and issued equity securities held in its
treasury), the number of such equity securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the Rights
are listed on any national securities exchange, the Company shall use its best
efforts, from and after such time as the Rights become exercisable, to cause
all such securities issued or reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and
any applicable securities laws and to keep such registration effective until
the earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to ensure
that all securities delivered upon exercise of the Rights shall, at the time
of delivery of the certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
15
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered for
exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall
be applicable only upon and following the occurrence of a Section 11(a)(ii)
Event.
Section 10. SECURITIES RECORD DATE. Each person in whose name any
certificate for securities of the Company is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the securities represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate representing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the securities transfer books of the Company 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 securities transfer books of the Company are open.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE UPON
EXERCISE OF RIGHTS OR NUMBER OF RIGHTS. The Exercise Price, the number and
kind of securities that may be purchased upon exercise of a 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 that the Company shall at any time after
the Close of Business on the Record Date and prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date
(A) declare or pay any dividend on the Preferred Shares payable in
Preferred Shares or Voting Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue Preferred Shares or
Voting Shares in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), then, and upon each such event, the number
and kind of
16
Preferred Shares or other securities issuable upon the exercise of a
Right on the date of such event shall be proportionately adjusted so
that the holder of any Right exercised on or after such date shall be
entitled to receive, upon the exercise thereof and payment of the
Exercise Price, the aggregate number and kind of Preferred Shares or
other securities or other property, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time
when such Right was exercisable and the transfer books of the Company
were open, such holder would have owned upon such exercise and would
have been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15%
Ownership Date shall have occurred and neither the Redemption Date
nor the Expiration Date shall have occurred prior to the tenth
Business Day following such 15% Ownership Date, then, and upon each
such event, proper provision shall be made so that except as provided
in Section 7(d) hereof, each holder of a Right shall thereafter have
the right to receive, upon the exercise thereof in accordance with
the terms of this Agreement and payment of the then current Exercise
Price, in lieu of the securities or other property otherwise
purchasable upon such exercise, such number of Common Shares of the
Company as shall equal the result obtained by multiplying the then
current Exercise Price by the then number of one-hundredths of a
Preferred Share for which a Right was exercisable (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one-hundredths of a Preferred
Share for which a Right would have been exercisable if the
Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 11(a)(ii) Event) immediately prior
to such Section 11(a)(ii) Event, and dividing that product by 50% of
the Current Market Price (determined pursuant to Section 11(d)
hereof) of a Common Share on the date of occurrence of the relevant
Section 11(a)(ii) Event (such number of shares being hereinafter
referred to as the "Adjustment Shares"). Successive adjustments shall
be made pursuant to this paragraph each time a Section 11(a)(ii)
Event occurs.
17
(iii) In the event that on the date of a Section
11(a)(ii) Event the aggregate number of Common Shares that are
authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is less than the aggregate number of Adjustment
Shares thereafter issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Common Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), then,
and upon each such event, the Company shall substitute for the pro rata
portion of the Unavailable Adjustment Shares that would otherwise be
issuable thereafter upon the exercise of each Right and payment of the
Exercise Price, (A) cash, (B) other equity securities of the Company
(including, without limitation, shares of preferred stock of the
Company or units of such shares having the same Current Market Price as
one Common Share (a "Common Share Equivalent")), (C) debt securities of
the Company, (D) other property or (E) any combination of the
foregoing, in each case having an aggregate Current Market Price equal
to the aggregate Current Market Price of the Unavailable Adjustment
Shares for which substitution is made. Subject to Section 7(d) hereof,
in the event that the Company takes any action pursuant to this Section
11(a)(iii), such action shall apply uniformly to all outstanding
Rights.
(b) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, fix a record date prior
to the earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred
18
Shares that the aggregate offering price of the total number of Preferred
Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current Market Price, and the denominator of
which shall be equal to the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or Preferred
Share Equivalents to be offered for subscription or purchase (or into which
the convertible securities to be so offered are initially convertible);
provided, however, that if such rights, options or warrants are not
exercisable immediately upon issuance but become exercisable only upon the
occurrence of a specified event or the passage of a specified period of time,
then the adjustment to the Exercise Price shall be made and become effective
only upon the occurrence of such event or such passage of time, and such
adjustment shall be made as if the record date for the issuance of such
rights, options or warrants had been the Business Day immediately preceding
the date upon which such rights, options or warrants became exercisable.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
to the Exercise Price shall be made successively whenever such a record date
is fixed, and in the event that such rights or warrants are not so issued,
the Exercise Price shall be adjusted to be the Exercise Price that would then
be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the excess of the Current
Market Price per Preferred Share on such record date over and above the fair
market value of the portion of the securities or assets to be so distributed
with respect to one Preferred Share, and the denominator of which shall be equal
to such Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be
19
adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(d) For the purpose of any computation under this Section 11,
if the Preferred Shares are not publicly held or traded, the "Current Market
Price" per Preferred Share shall be conclusively deemed to be the Current Market
Price per Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Exercise Price; provided, however, that any adjustments that by reason of
this Section 11(e) are not required to be made shall be cumulated 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-thousandth of a Common
Share or other share or one-millionth of a Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any securities of the Company other than Preferred Shares, the number
of such other securities so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Preferred Shares
contained in this Section 11, and the other provisions of this Agreement with
respect to Preferred Shares shall apply on like terms to any such other
securities.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) below, upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-millionth of
a Preferred Share) obtained by multiplying (i) the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior
20
to such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any
adjustment of the Exercise Price, to adjust the number of Rights instead of
making any adjustment in the number of Preferred Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one-hundredths of a
Preferred Share 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
one-thousandth of a Right) obtained by dividing the Exercise Price in effect
immediately prior to the adjustment of the Exercise Price by the Exercise Price
in effect immediately after such adjustment of the Exercise Price. The Company
shall make a public announcement of its election to adjust the number of Rights
pursuant to this Section 11(i), indicating the record date for the adjustment
and, if known at the time, the amount of the adjustment to be made. Such record
date may be the date on which the Exercise Price is adjusted or any day
thereafter, but, if separate Right Certificates have been issued, it shall be at
least 10 days after the date of such public announcement. If separate Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates representing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment or, at the option of the Company, cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of such adjustment, and upon surrender
thereof if required by the Company, new Right Certificates representing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates to be so distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of one-hundredths of a Preferred Share issuable upon the
exercise of one Right, the Right Certificates theretofore and thereafter issued
may
21
continue to express the Exercise Price per one one-hundredth of a Preferred
Share and the number of Preferred Shares issuable upon the exercise of one
Right that were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action that may, in the advice or opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-hundredths of a Preferred Share at such
adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such further adjustments
in the number of one-hundredths of a Preferred Share that may be purchased upon
exercise of one Right, and such further adjustments in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the Current Market
Price thereof, (iii) issuance wholly for cash of Preferred Shares or securities
that by their terms are convertible into or exchangeable for Preferred Shares,
(iv) dividends on Preferred Shares payable in Preferred Shares or (v) issuance
of rights, options or warrants referred to Section 11(b) hereof, hereafter made
by the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
22
(n) In the event that the Company shall, at any time after
the Close of Business on the Record Date and prior to the Close of Business
on the earliest of the date of the first Section 11(a)(ii) Event, the date of
the first Section 13(a) Event, the Redemption Date or the Expiration Date,
(i) pay any dividend on the Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, (iii) combine the outstanding Common
Shares into a smaller number of Common Shares or (iv) issue Common Shares in
a reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common
Shares outstanding immediately prior to such event and the denominator of
which shall be equal to the number of Common Shares outstanding immediately
after such event. Successive adjustments shall be made pursuant to this
Section 11(n) each time such a dividend is paid or such a subdivision,
combination or reclassification is effected. If an event occurs that would
require an adjustment under both this Section 11(n) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(n) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER
OF SHARES ISSUABLE UPON EXERCISE OF RIGHTS. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 26 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or to give such notice
shall not affect the validity or the force and effect of such adjustment. Any
adjustment to be made pursuant to Section 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment.
Section 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event (a "Section 13(a) Event") that, at any time
on or after the 15% Ownership Date and prior to the earlier of the Redemption
Date or the Expiration Date,
23
(1) the Company shall, directly or indirectly, consolidate with or merge with
and into any other Person and the Company shall not be the continuing or
surviving corporation in such consolidation or merger, (2) any Person shall,
directly or indirectly, consolidate with or merge with and into the Company
and the Company shall be the continuing or surviving corporation in such
merger and, in connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or
more of its Subsidiaries shall directly or indirectly, sell or otherwise
transfer, in one or more transactions (other than transactions in the
ordinary course of business), assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons other than the Company or one or more of
its wholly owned Subsidiaries (such Persons, together with the Persons
described in clauses (1) and (2) above shall be collectively referred to in
this Section 13 as the "Surviving Person"), then, and in each such case,
proper provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each
holder of a Right shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and
payment of the then current Exercise Price, in lieu of the securities
or other property otherwise purchasable upon such exercise, such number
of validly authorized and issued, fully paid and nonassessable Common
Shares of the Surviving Person as shall be equal to a fraction, the
numerator of which is the product of the then current Exercise Price
multiplied by the number of one-hundredths of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so purchasable
if the Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 13(a) Event, or, if a Section
11(a)(ii) Event has occurred prior to such Section 13(a) Event, the
product of the number of one-hundredths of a Preferred Share
purchasable upon the exercise of a Right (or, if the Distribution Date
shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share that would
have been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior
24
to such Section 11(a)(ii) Event, multiplied by the Exercise Price in
effect immediately prior to such Section 11(a)(ii) Event), and
the denominator of which is 50% of the Current Market Price per
Common Share of the Surviving Person on the date of
consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable
for and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement;
(iii) the term, "Company," shall thereafter be deemed
to refer to the Surviving Person; and
(iv) the Surviving Person shall take such steps
(including, but not limited to, the reservation of a sufficient number
of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to ensure that the
provisions hereof shall thereafter be applicable to its Common Shares
thereafter deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event
is the sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), but less than 100% thereof, then each Person
acquiring all or a portion thereof shall assume the obligations of the Company
as to a fraction of each of the Rights equal to the fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the obligations of the Company as to the remaining fraction of each of the
Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event
unless prior thereto the Company and the Surviving Person shall have executed
and delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
25
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective
as soon as practicable after such filing, use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the Common Shares of the Surviving Person
purchasable upon exercise of the Rights on a national securities
exchange, or use its best efforts to cause the Rights and such Common
Shares to meet the eligibility requirements for quotation on NASDAQ;
and
(iii) deliver to holders of the Rights historical
financial statements for such Surviving Person that comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
(d) In the event that at any time after the occurrence of a
Section 11(a)(ii) Event some or all of the Rights shall not have been exercised
pursuant to Section 11 hereof prior to the date of a Section 13(a) Event, such
Rights shall thereafter be exercisable only in the manner described in Section
13(a) hereof. In the event that a Section 11(a)(ii) Event occurs on or after the
date of a Section 13(a) Event, Rights shall not be exercisable pursuant to
Section 11 hereof but shall instead be exercisable pursuant to, and only
pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a Section
13(a) Event.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that represent fractional Rights. If
the Company shall determine not to issue such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with respect to
which such fractional Rights would otherwise be issuable, at the time such
fractional Rights would otherwise
26
have been issued as provided herein, an amount in cash equal to the same
fraction of the Current Market Price of a whole Right on the Business Day
immediately prior to the date upon which such fractional Rights would
otherwise have been issuable.
(b) The Company shall not be required to issue fractions of
Common Shares or Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of Rights, or
to distribute certificates that represent fractional Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional Common Shares or Preferred Shares upon exercise of such Right, except
as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, on such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit,
27
action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise the Rights represented by such
Right Certificate or by such certificate for Common Shares in the manner
provided in such 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, and injunctive relief against actual or threatened
violations, of the obligations of any Person under this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
represented by certificates for Common Shares registered in the name of the
holders of such Common Shares (which certificates for Common Shares shall also
constitute Right Certificates), and each such Right shall be transferable only
in connection with the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall
only be transferable on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations of
ownership or writing on the Right Certificate 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.
Section 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT
DEEMED A STOCKHOLDER. No holder, as such, of any Right or Right Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the securities of the Company that may at any time be issuable upon
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of any
Right or Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any
28
meeting thereof, to give or withhold consent to any corporate action, to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 26 hereof), or to receive dividends or subscription
rights, or otherwise, in each case until such Right or the Rights represented
by such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent as
compensation for all services rendered by it hereunder reasonable and customary
fees and expenses. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21
29
hereof. If, at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and if at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in such
Right Certificates, and in this Agreement.
(b) If at any time the name of the Rights Agent shall be
changed, and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and if at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; and in all such cases such Right Certificates shall have
the full force provided in such Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
30
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement, or in the
Right Certificates (except its countersignature thereof), or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including any Rights becoming null and void
pursuant to Section 7(d) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 7, 11,
13 and 23 hereof, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights represented by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares or other securities to be issued pursuant to
this Agreement or any Right Certificate, or as to whether any Preferred Shares
or Common Shares or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Vice Chairman, the President, any
31
Vice President, the Secretary, any Assistant Secretary or the Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer.
(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 the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided that reasonable care was exercised
in the selection and continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting as such, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
the registered holder of any Right Certificate may apply to
32
any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation 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 so long as such corporation is authorized to do business
as a banking institution in the State of New York), in good standing, having
a principal office in New York, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose of
this Agreement and so that the successor Rights Agent may appropriately act
as Rights Agent hereunder. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option, issue new Right
Certificates in such form as may be approved by the Board of Directors in order
to reflect any adjustment or change in the Exercise Price and the number or kind
or class of shares or other securities or property purchasable upon exercise of
the Rights in accordance with the provisions of this Agreement.
Section 23. REDEMPTION OF RIGHTS.
(a) Until the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors may, at their option, direct the Company
to redeem all, but not less than all, of the then outstanding Rights at a
redemption price of $.0067 per Right, as such
33
redemption price shall be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
"Redemption Price"), and the Company shall so redeem the Rights.
(b) Immediately upon the action of the Board of Directors
directing the Company to redeem the Rights pursuant to subsection (a) of this
Section 23, or at such time and date thereafter as they may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 Business Days after the date of such
action, the Company shall give notice of such redemption to the holders of
Rights by mailing such notice to all holders of Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, if prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives such notice, but neither the failure
to give any such notice nor any defect therein shall affect the legality or
validity of such redemption. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, and other
than in connection with the purchase of Common Shares prior to the earlier of
the date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event.
(c) The Company may, at its option, pay the Redemption Price
in cash, Common Shares, Preferred Shares, other equity securities of the
Company, debt securities of the Company, other property or any combination of
the foregoing, in each case having an aggregate Current Market Price on the
Redemption Date equal to the Redemption Price.
Section 24. EXCHANGE OF RIGHTS.
(a) At any time after the 15% Ownership Date and prior to the
first date thereafter upon which a 15% Stockholder, together with all Affiliates
and Associates of such 15% Stockholder, shall be the Beneficial Owner of 50% or
more of the Voting Shares then outstanding, the Board of Directors may, at their
option, direct the Company to exchange all, but not less than all, of the then
outstanding Rights for Common Shares at an exchange ratio of one Common Share
per Right, as such exchange ratio shall be
34
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction involving Preferred Shares or Common Shares that occurs after the
date hereof (the "Exchange Ratio"), and the Company shall so exchange the
Rights.
(b) Immediately upon the action of the Board of Directors
directing the Company to exchange the Rights pursuant to subsection (a) of this
Section 24, or at such time and date thereafter as they may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holder of a Right shall be to
receive a number of Common Shares equal to the Exchange Ratio. Within 10
Business Days after the date of such action, the Company shall give notice of
such exchange to the holders of Rights by mailing such notice to all holders of
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, if prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of such exchange. Each such notice of
exchange shall state the method by which the Rights will be exchanged for Common
Shares. Neither the Company nor any of its Affiliates or Associates may,
directly or indirectly, redeem, acquire or purchase for value any Rights in any
manner other than that specifically set forth in Section 23 hereof or in this
Section 24, and other than in connection with the purchase of Common Shares
prior to the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event.
(c) Notwithstanding the foregoing, in the event that the
aggregate number of Common Shares that are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise or exchange of the Rights is less than the
aggregate number of Common Shares issuable upon the exchange of the Rights in
accordance with this Section 24 (the excess of such number of authorized Common
Shares over and above such number of issuable Common Shares being hereinafter
referred to as the "Unavailable Exchange Shares"), then the Company shall
substitute for the pro rata portion of the Unavailable Exchange Shares that
would otherwise be issuable upon the exchange of the Rights in accordance with
this Section 24, (i) cash, (ii) other equity securities of the Company
(including, without limitation, Common Share Equivalents), (iii) debt securities
of the Company, (iv) other property or (v) any combination of the
35
foregoing, in each case having an aggregate Current Market Price equal to the
aggregate Current Market Price of the Unavailable Exchange Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
Company takes any action pursuant to this Section 24, such action shall apply
uniformly to all outstanding Rights.
Section 25. CERTAIN CASH TENDER OFFERS.
(a) In the event that, at any time prior to the first date
upon which the Rights shall have become nonredeemable as provided in Section 23
hereof and nonexchangeable as provided in Section 24 hereof, the Company shall
receive a Cash Tender Offer Proposal from any Prospective Offeror, the Board of
Directors of the Company shall, within 15 Business Days thereafter, at their
option, either (i) engage a nationally recognized investment banking firm to
render an opinion as to whether the price per Voting Share in cash to be paid to
the holders of Voting Shares pursuant to such Cash Tender Offer Proposal is fair
and adequate (the "Fairness Opinion"), which Fairness Opinion shall be delivered
to the Board of Directors within 20 Business Days after such engagement, or (ii)
call a special meeting of stockholders (the "Special Meeting") for the purpose
of voting on a precatory resolution requesting the Board of Directors to accept
such Cash Tender Offer Proposal as such Cash Tender Offer Proposal may be
amended or revised by such Prospective Offeror from time to time to increase the
price per Voting Share in cash to be paid to the holders of Voting Shares (the
"Resolution"). The Special Meeting, if any, shall be held on a date selected by
the Board of Directors, which date shall be not less than 90 nor more than 120
days after the later of the date such Cash Tender Offer Proposal is received by
the Company (the "Proposal Date") or the date of any previously scheduled
meeting of stockholders to be held within 60 days after the Proposal Date;
provided, however, that if (x) such other meeting shall have been called for the
purpose of voting on a precatory resolution with respect to another Cash Tender
Offer Proposal and (y) the Proposal Date shall be not later than 15 days after
the date such other Cash Tender Offer Proposal was received by the Company, then
both the Resolution and such other resolution shall be voted on at such meeting
and such meeting shall be deemed to be the Special Meeting. A majority of the
Board of Directors shall set a date for determining the stockholders of record
entitled to notice of and to vote at the Special Meeting, if any, in accordance
with the Company's Certificate of Incorporation and Bylaws and with applicable
law. At the request of the Prospective Offeror, the Company shall include in any
proxy soliciting material prepared by it in connection with the Special Meeting,
if any, proxy
36
soliciting material submitted by the Prospective Offeror; provided, however,
that the Prospective Offeror shall by written agreement with the Company
contained in or delivered with such request have indemnified the Company
against any and all liabilities resulting from any misstatements, misleading
statements and omissions contained in the Prospective Offeror's proxy
soliciting material and shall have agreed to pay the Company's incremental
costs incurred as a result of including such material in the Company's proxy
soliciting material.
(b) In the event that (x) the Fairness Opinion states that the
price per Voting Share to be paid in cash to the holders of Voting Shares
pursuant to the Cash Tender Offer Proposal is fair and adequate or (y) at the
Special Meeting the Resolution receives the affirmative vote of the majority of
the Voting Shares outstanding as of the record date of the Special Meeting and
not Beneficially Owned on such day by the Prospective Offeror or any of its
Affiliates or Associates, then, subject to Section 25(c) below, proper provision
shall be made in order that upon the consummation of any tender offer (provided
that such tender offer is consummated prior to the 60th day following the date
of such event, or prior to such later day upon which a suspension of operation
pursuant to Section 25(c) below shall terminate) pursuant to which the
Prospective Offeror offers to purchase and purchases any and all of the Voting
Shares held by Persons other than the Prospective Offeror and its Affiliates and
Associates at a price per Voting Share in cash equal to or greater than the
price per Voting Share provided in the Cash Tender Offer Proposal (a "Fair
Offer"), (i) each previously unexercised Right that has not become nonredeemable
as provided in Section 23 hereof shall be redeemed in accordance with Section 23
hereof, effective immediately prior to the consummation of such tender offer,
(ii) the acquisition of Common Shares pursuant to such tender offer shall not be
taken into account in determining whether the 15% Ownership Date has or has not
occurred, and (iii) neither the commencement of, nor the first public
announcement of the intent of such Person to commence, such tender offer shall
be taken into account in determining whether the Distribution Date has or has
not occurred. The redemption of Rights pursuant to this Section 25 shall not in
any way affect the exercisability of such Rights prior to the effective time of
such redemption.
(c) Notwithstanding Section 25(b) above, in the event that the
Board of Directors determines that such action is in the best interests of the
stockholders of the Company, they may, at any time prior to the consummation of
the tender offer referred to in the first sentence of Section 25(b) above,
suspend the operation of clauses (i)
37
and (ii) in such sentence for a period of time not to exceed 120 days, such
suspension to be effective upon the date of the first public announcement
thereof.
(d) Nothing contained in this Section 25 shall be deemed to be
in derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any Cash Tender Offer Proposal, or to recommend that
holders of Voting Shares reject any Cash Tender Offer Proposal, or to take any
other action (including, without limitation, the commencement, prosecution,
defense or settlement of any litigation or the submission of additional or
alternative Cash Tender Offer Proposals or other proposals to the Special
Meeting) with respect to any Cash Tender Offer Proposal or any tender offer that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
(e) Nothing is this Section 25 shall be construed as limiting
or prohibiting the Company or any Prospective Offeror from proposing or engaging
in any acquisition, disposition or other transfer of any securities of the
Company, any merger or consolidation involving the Company, any sale or other
transfer of assets of the Company, any liquidation, dissolution or winding up of
the Company, any other business combination or other transaction, or any other
action; provided, however, that the holders of Rights shall have the rights set
forth in this Agreement with respect to any such acquisition, disposition,
transfer, merger, consolidation, sale, liquidation, dissolution, winding up,
business combination, transaction or action.
Section 26. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare
or pay any dividend payable on or make any distribution with respect to its
Common Shares or Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Common Shares or Preferred Shares
options, rights or warrants to subscribe for or to purchase any additional
shares thereof or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Common Shares or
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding shares), (iv) to effect any consolidation or merger with or into,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of
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the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then and in each such case, the
Company shall give to each holder of a Right Certificate, in accordance with
Section 27 hereof, a notice of such proposed action, that shall specify the
record date for the purpose of such dividend or distribution, or the date
upon which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of record of the Common Shares or
Preferred Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least 20 days prior to the record date for determining holders of the Common
Shares or Preferred Shares for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
the Common Shares or Preferred Shares, whichever date shall be the earlier.
The failure to give the notice required by this Section 26 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
(b) As soon as practicable after the occurrence of each
Section 11(a)(ii) Event and each Section 13(a) Event, the Company shall give to
each holder of a Right Certificate, in accordance with Section 27 hereof, a
notice of the occurrence of such event, specifying the event and the
consequences of the event to holders of Rights under Section 11 or 13 hereof.
Section 27. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Building Materials Holding Corporation
San Francisco
Attention: Xxxx X. Street,
Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed
39
(until another address is filed in writing with the Company) to the principal
office of the Rights Agent as follows:
American Stock Transfer and Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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 28. SUPPLEMENTS AND AMENDMENTS.
(a) the Board of Directors may, from time to time, without the
approval of any holders of Rights, direct the Company and the Rights Agent to
supplement or amend any provision of this Agreement in any manner, whether or
not such supplement or amendment is adverse to any holder of Rights, and the
Company and the Rights Agent shall so supplement or amend such provision;
provided, however, that from and after the earliest of (i) the date of the first
Section 11(a)(ii) Event, (ii) the date of the first Section 13(a) Event, (iii)
the Redemption Date or (iv) the Expiration Date, this Agreement shall not be
supplemented or amended in any manner that would materially and adversely affect
any holder of outstanding Rights other than a 15% Stockholder or a Surviving
Person.
(b) From and after the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event and prior
to the earlier of the Redemption Date or the Expiration Date, the Company shall
not effect any amendment to the provisions of its Certificate of Incorporation
relating to the Preferred Shares that would materially and adversely affect the
rights, privileges or preferences of the Preferred Shares without the prior
approval of the holders of two-thirds or more of the then outstanding Rights.
Section 29. CERTAIN COVENANTS. Subject to Section 28 hereof
and the other provisions of this Agreement, from and after the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event and prior to the earlier of the Redemption Date or the Expiration Date,
the Company shall not (a) issue or sell, or permit any Subsidiary to issue or
sell, to a 15% Stockholder or a Surviving
40
Person, or any Affiliate or Associate of a 15% Stockholder or a Surviving
Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 15% Stockholder or a Surviving Person, (i) any
rights, options, warrants or convertible securities on terms similar to, or
that materially adversely affect the value of, the Rights or (ii) Preferred
Shares, Common Shares or shares of any other class of capital stock of the
Company, if such sale is intended to or would materially adversely affect the
value of the Rights, or (b) take any other action that is intended to or
would materially adversely affect the value of the Rights.
Section 30. 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 31. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) any legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 33. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts made
and performed entirely within such state.
Section 34. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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Section 35. 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
Attest: BUILDING MATERIALS HOLDING
CORPORATION
By /S/ XXXX X. STREET By /S/ XXXXXX X. XXXXXX
----------------------------- ------------------------------
Name: Xxxx X. Street Name: Xxxxxx X. Xxxxxx
Title: Secretary Title: President
Attest: AMERICAN STOCK TRANSFER AND
TRUST COMPANY
By /S/ XXXXX XXXXXX By /S/ XXXXXXX X. XXXXXX
----------------------------- ------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
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