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EXHIBIT 4.2
TWEETER HOME ENTERTAINMENT GROUP, INC.
SHAREHOLDERS' RIGHTS AGREEMENT
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TABLE OF CONTENTS
Section Page
Certain Definitions........................................................ 1
Appointment of Rights Agent................................................ 6
Issue of Right Certificates................................................ 7
Form of Right Certificates................................................. 9
Countersignature and Registration.......................................... 10
Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates...................................................... 10
Exercise of Rights; Exercise Price; Expiration Date of Rights.............. 11
Cancellation and Destruction of Right Certificates......................... 13
Reservation and Availability of Preferred Stock............................ 14
Preferred Stock Record Date................................................ 15
Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights........................................................ 15
Certificate of Adjusted Exercise Price or Number of Shares................. 24
Consolidation, Merger or Sale or Transfer of Assets........................ 24
Fractional Rights and Fractional Shares.................................... 27
Rights of Action........................................................... 27
Agreement of Right Holders................................................. 28
Right Certificate Holder Not Deemed a Shareholder.......................... 29
Concerning the Rights Agent................................................ 29
Merger or Consolidation or Change of Name of Rights........................ 29
Duties of Rights Agent..................................................... 29
Change of Rights Agent..................................................... 29
Issuance of New Right Certificates......................................... 29
Redemption................................................................. 29
Exchange................................................................... 29
Notice of Certain Events................................................... 29
Notices.................................................................... 29
Supplements and Amendments................................................. 29
Successors................................................................. 29
Determinations and Actions by the Board of Directors....................... 29
Benefits of this Agreement................................................. 29
Severability............................................................... 29
Governing Law.............................................................. 29
Counterparts............................................................... 29
Descriptive Headings....................................................... 29
Exhibit A -- Certificate of Designation of Series A Junior Participating
Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
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TWEETER HOME ENTERTAINMENT GROUP, INC.
SHAREHOLDER RIGHTS AGREEMENT
This Shareholder Rights Agreement is dated as of [________], 1998,
between Tweeter Home Entertainment Group, Inc., a Delaware corporation (the
"Company"), and [_________________], a [______________________] (the "Rights
Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, on _________, 1998, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as such term is
hereinafter defined) for each outstanding share of Common Stock, $.01 par value
per share, of the Company outstanding as of the commencement of business on
_________, 1998 (the "Record Date"), and contemplates the issuance of one Right
for each share of Common Stock of the Company issued (whether originally issued
or sold from the Company's treasury) between the Record Date and the earlier of
the Distribution Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one
one-thousandth of one share of Series A Junior Participating Cumulative
Preferred Stock of the Company having the rights, powers and preferences set
forth on Exhibit A hereto, upon the terms and subject to the conditions
hereinafter set forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of more than 20% of the Common Shares (as such term is hereinafter defined) then
outstanding, but shall not include (a) the Company, (b) any Subsidiary (as such
term is hereinafter defined) of the Company, or (c) any employee benefit plan or
compensation arrangement of the Company or any
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Subsidiary of the Company (the Persons described in clauses (a) through (c)
above are referred to herein as "Exempt Persons").
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition by the Company of Common Shares which,
by reducing the number of Common Shares outstanding, increases the proportionate
number of Common Shares beneficially owned by such Person to more than 20% of
the Common Shares then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of more than 20% of the Common Shares then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
shares (other than pursuant to a stock split, stock dividend or similar
transaction) of Common Shares and immediately thereafter be the Beneficial Owner
of more than 20% of the Common Shares then outstanding, then such Person shall
be deemed to be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1.1, has become such inadvertently, and
such Person divests as promptly as practicable (or within such period of time as
the Board of Directors determines is reasonable) a sufficient number of shares
of Common Stock of the Company so that such person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1.1.
Furthermore, no person who is a stockholder of the Company prior to
the completion of the Company's Initial Public Offering will be an Acquiring
Person unless such person is the Beneficial Owner of both (i) more than 20% of
the Common Shares then outstanding and (ii) a greater percentage of the
outstanding Common Shares than the percentage held by such person immediately
after the completion of the Initial Public Offering. The preceding two
paragraphs shall apply, mutatis mutandi, to such persons after taking into
account the preceding sentence.
1.2 "Adjustment Shares" shall have the meaning set forth in
Section 11.1.2 hereof.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Rules under the Exchange Act, as in
effect on the date of this Agreement; provided, however, that no Person who is a
director or officer of the Company shall be deemed an Affiliate or an Associate
of any other director or officer of the Company solely as a result of his or her
position as director or officer of the Company.
1.4 A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities: (i) which such Person or any of
such Person's Affiliates or Associates, directly or indirectly, beneficially
owns (as determined pursuant to Rule 13d-3 of the Rules under the Exchange Act,
as in effect on the date of
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this Agreement); (ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has:
1.4.1 the right to acquire (whether such right is
exercisable immediately or only after the passage of time or upon the
satisfaction of any conditions or both) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (1) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; (2) securities issuable upon exercise of these Rights
at any time prior to the occurrence of a Triggering Event; or (3) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event, which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant to Sections
3.1, 11.9 or 22 hereof; or
1.4.2 the right to vote pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the Rules under the Exchange Act and (2) is not also
then reportable by such person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
1.4.3 the right to dispose of pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than customary
arrangements with and between underwriters and selling group members with
respect to a bona fide public offering of securities); or
1.4.4 which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in clause (B)
of Section 1.4.2 hereof) or disposing of any securities of the Company;
provided, however, that (a) no Person engaged in business as an underwriter of
securities shall be deemed the Beneficial Owner of any securities acquired
through such Person's participation as an underwriter in good faith in a firm
commitment underwriting until the expiration of forty (40) days after the date
of such acquisition, (b) no trustee or similar Person, organized, appointed or
established by the Company or any Subsidiary of the Company, holding shares of
Common Stock of the Company for or
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pursuant to the terms of any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company shall be deemed the Beneficial
Owner of any securities acquired or held by such Person in such capacity, and
(c) no Person shall be deemed the Beneficial Owner of any securities acquired or
received from the Company by such Person pursuant to an employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company.
1.5 "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in Boston, Massachusetts are
authorized or obligated by law or executive order to close.
1.6 "Certificate" shall mean the Company's Amended and Restated
Certificate of Incorporation as in effect at the closing of the Initial Public
Offering.
1.7 "Close of Business" on any given date shall mean 5:00 P.M.,
Boston, Massachusetts time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Boston, Massachusetts time, on
the next succeeding Business Day.
1.8 "Common Shares" shall mean shares of Common Stock.
1.9 "Common Stock" when used in reference to the Company shall
mean the common stock, $.01 par value per share, of the Company or any other
shares of capital stock of the Company into which such stock shall be
reclassified or changed. "Common Stock" when used with reference to any Person
other than the Company organized in corporate form shall mean (i) the capital
stock or other equity interest of such Person with the greatest voting power or
(ii) the equity securities or other equity interest having power to control or
direct the management of such Person or, if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person and which have issued any such outstanding capital stock,
equity securities or equity interest. "Common Stock" when used with reference to
any Person not organized in corporate form shall mean units of beneficial
interest which shall be entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall have the power to remove
or otherwise replace the general partner or partners.
1.10 "Current Value" shall have the meaning set forth in Section
11.1.3 hereof.
1.11 "Distribution Date" shall have the meaning set forth in
Section 3.1 hereof.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor statute.
1.13 "Exercise Price" shall have the meaning set forth in Section
4.1 hereof.
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1.14 "Expiration Date" and "Final Expiration Date" shall have the
meanings set forth in Section 7.1 hereof.
1.15 "Fair Market Value" of any securities or other property shall
be as determined in accordance with Section 11.4 hereof.
1.16 "Group" shall have the meaning ascribed thereto in clause (b)
of the definition of "Person."
1.17 "Initial Public Offering" means the initial public offering of
Common Stock of the Company by the Company pursuant to a Registration Statement
on Form S-1.
1.18 "Person" shall mean (a) an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust, a
government or political subdivision, any unincorporated organization, or any
other association or entity, and (b) a "group" as that term is used for purposes
of Section 13(d)(3) of the Exchange Act (any such group under this clause (b), a
"Group").
1.19 "Preferred Stock" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, $.01 par value per share, of the
Company having the rights and preferences set forth in the form of Certificate
of Designation attached hereto as Exhibit A.
1.20 "Preferred Stock Equivalents" shall have the meaning set forth
in Section 11.2 hereof.
1.21 "Principal Party" shall have the meaning set forth in Section
13.2 hereof.
1.22 "Record Date" shall have the meaning set forth in the preamble
to this Agreement.
1.23 "Redemption Price" shall have the meaning set forth in Section
23 hereof.
1.24 "Right Certificate" shall have the meaning set forth in
Section 3.1.
1.25 "Related Party" shall have the meaning ascribed thereto in the
Certificate.
1.26 "Rules" when used with reference to the Exchange Act or the
Securities Act, shall mean the rules and regulations of the Securities and
Exchange Commission, or any successor federal agency under such acts.
1.27 "Section 11.1.2 Event" shall have the meaning set forth in
Section 11.1.2 hereof.
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1.28 "Section 11.1.2 Trigger Date" shall have the meaning set forth
in Section 11.1.3 hereof.
1.29 "Section 13 Event" shall mean any event described in clauses
(a), (b) or (c) of Section 13.1 hereof.
1.30 "Section 24.1.1 Exchange Ratio" shall have the meaning set
forth in Section 24.1.1 hereof.
1.31 "Section 24.1.2 Exchange Ratio" shall have the meaning set
forth in Section 24.1.2 hereof.
1.32 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute.
1.33 "Spread" shall have the meaning set forth in Section 11.1.3
hereof.
1.34 "Stock Acquisition Date" shall mean the date of the first
public announcement (which for purposes of this definition shall include,
without limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) by the Company or an Acquiring
Person that an Acquiring Person has become such.
1.35 "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions of such corporation or other entity are at the time directly or
indirectly beneficially owned or otherwise controlled by such Person either
alone or together with one or more Affiliates of such Person.
1.36 "Substitution Period" shall have the meaning set forth in
Section 11.1.3 hereof.
1.37 "Triggering Event" shall mean any Section 11.1.2 Event or any
Section 13 Event.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall
be as the Company shall determine. The Company shall give ten (10) days prior
written notice to the Rights Agent of the appointment of one or more Co-Rights
Agents and the respective duties of the Rights Agent and any such Co-
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Rights Agents. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such Co-Rights Agent.
3. ISSUE OF RIGHT CERTIFICATES.
3.1 From the date hereof until the earlier of (a) the
Close of Business on the tenth calendar day after the Stock Acquisition Date or
(b) the Close of Business on the tenth Business Day (or such other calendar day,
if any, as the Board of Directors may determine in its sole discretion) after
the date a tender or exchange offer by any Person, other than an Exempt Person,
is first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act, or any successor rule, if, upon consummation thereof, such Person
would be the Beneficial Owner of more than 20% of the Common Shares then
outstanding (and, if such person was a stockholder of the Company prior to the
completion of the Company's Initial Public Offering, such person's Beneficial
Ownership of Common Shares after consummation would cause such person to be the
Beneficial Owners of a greater percentage of the outstanding Common Shares than
the percentage held by such person immediately after the completion of the
Initial Public Offering) (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights) (the earlier of such
dates being herein referred to as the "Distribution Date"), (i) the Rights will
be evidenced (subject to the provisions of Section 3.2 hereof) by the
certificates for the Common Stock of the Company registered in the names of the
holders of the Common Stock of the Company (which certificates for Common Stock
of the Company shall be deemed also to be certificates for Rights) and not by
separate certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock of the
Company. As soon as practicable after the Distribution Date, the Rights Agent
will, at the Company's expense, send, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock of the Company as of the Close
of Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form of
Exhibit B hereto (the "Right Certificates"), evidencing one Right for each share
of Common Stock of the Company so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock of the Company has been made pursuant to Section 11.15 hereof, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14.1 hereof) at the time of distribution of the Right
Certificates, so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Close of Business on the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
3.2 With respect to certificates for the Common Stock of
the Company issued prior to the Close of Business on the Record Date, the Rights
will be evidenced by such certificates for the Common Stock of the Company on or
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the registered holders of the Common Stock of
the Company also shall be the registered holders of the associated Rights. Until
the Distribution Date (or the earlier redemption, expiration or termination of
the Rights), the transfer of any of the certificates for the Common Stock of
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the Company outstanding prior to the date of this Agreement shall also
constitute the transfer of the Rights associated with the Common Stock of the
Company represented by such certificate.
3.3 Certificates for the Common Stock of the Company
issued after the Record Date, but prior to the earlier of the Distribution Date
or the redemption, expiration or termination of the Rights, shall be deemed also
to be certificates for Rights, and shall bear a legend, substantially in the
form set forth below:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder Rights Agreement between
Tweeter Home Entertainment Group, Inc. (the "Company") and [_______________], as
Rights Agent, dated as of [_________], 1998, as amended, restated, renewed or
extended from time to time (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal offices of the Company and the stock transfer administration office of
the Rights Agent. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Board of Directors may authorize
the Company to redeem the Rights at a redemption price of $0.001 per Right,
subject to adjustment, under the terms of the Rights Agreement. The Company will
mail to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances, Rights issued to or held
by Acquiring Persons or any Affiliates or Associates thereof (as defined in the
Rights Agreement), and any subsequent holder of such Rights, may become null and
void. The Rights shall not be exercisable, and shall be void so long as held, by
a holder in any jurisdiction where the requisite qualification, if any, to the
issuance to such holder, or the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable."
With respect to such certificates containing the foregoing
legend, the Rights associated with the Common Stock of the Company represented
by such certificates shall be evidenced by such certificates alone until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificates. In the event that the Company purchases or
acquires any shares of Common Stock of the Company after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock of
the Company shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock of
the Company which are no longer outstanding. The failure to print the foregoing
legend on any such certificate representing Common Stock of the Company or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7.5 hereof.
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4. FORM OF RIGHT CERTIFICATES.
4.1 The Right Certificates (and the forms of election to
purchase shares and of assignment and certificate to be printed on the reverse
thereof) shall each be substantially in the form of EXHIBIT B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. The Right Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, shall
show the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (the
"Exercise Price"), but the number of such shares and the Exercise Price shall be
subject to adjustment as provided herein.
4.2 Any Right Certificate issued pursuant to Section 3.1
or Section 22 hereof that represents Rights beneficially owned by (a) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (b) a
transferee of an Acquiring Person (or of any Associate or Affiliate of an
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such, or (c) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (i) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights, the shares of
Common Stock of the Company associated with such Rights or the Company or (ii) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7.5 hereof, and any Right Certificate issued pursuant to
Section 6, Section 11 or Section 22 upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
have deleted therefrom the second sentence of the existing legend on such Right
Certificate and in substitution therefor shall contain the following legend:
"The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). This Right Certificate and the Rights represented hereby
may become null and void under certain circumstances as specified in Section 7.5
of the Rights Agreement."
The Company shall give notice to the Rights Agent promptly
after it becomes aware of the existence and identity of any Acquiring Person or
any Associate or Affiliate thereof. The Company shall instruct the Rights Agent
in writing of the Rights which
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should be so legended. The failure to print the foregoing legend on any such
Right Certificate or any defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of Section 7.5
hereof.
5. COUNTERSIGNATURE AND REGISTRATION.
5.1 The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board of Directors, or its President or any
Vice President and by its Treasurer or any Assistant Treasurer, or by its
Secretary or any Assistant Secretary, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof which
shall be attested to by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by an authorized signatory of the Rights Agent and shall
not be valid for any purpose unless so countersigned, and such countersignature
upon any Right Certificate shall be conclusive evidence, and the only evidence,
that such Right Certificate has been duly countersigned as required hereunder.
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, nevertheless, may be countersigned by an authorized
signatory of 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; and any Right Certificates may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
5.2 Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at one of its offices designated as the
appropriate place for surrender of Right Certificates upon exercise or transfer,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
6.1 Subject to the provisions of Section 4.2, Section 7.5
and Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Certificates, entitling
the registered holder to purchase a like number of one one-thousandths of a
share of Preferred Stock (or following a Triggering Event, preferred stock,
cash, property, debt securities, Common Stock of the Company or any combination
thereof) as the Right Certificate or Certificates surrendered then entitled such
holder to purchase and at the same Exercise Price. Any registered holder
desiring to transfer, split up, combine or
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exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Certificates to
be transferred, split up, combined or exchanged, with the form of assignment and
certificate duly executed, at the office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4.2, Section 7.5 and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Certificates, as the case may be, as so requested. The
Company may require payment by the registered holder of a Right Certificate, 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.
6.2 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 satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate, if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF RIGHTS.
7.1 Subject to Section 7.5 hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Exercise
Price for the total number of one one-thousandths of a share of Preferred Stock
(or other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercised, at or prior to the earlier of (a) the
Close of Business on the tenth anniversary of the date of this Agreement (the
"Final Expiration Date"), (b) the time at which the Rights are redeemed as
provided in Section 23 hereof or (c) the time at which such Rights are exchanged
as provided in Section 24 hereof (the earliest of (a), (b) or (c) being herein
referred to as the "Expiration Date"). Except as set forth in Section 7.5 hereof
and notwithstanding any other provision of this Agreement, any Person who prior
to the Distribution Date becomes a record holder of shares of Common Stock of
the Company may exercise all of the rights of a registered holder of a Right
Certificate with respect to the Rights associated with such shares of Common
Stock of the Company in accordance
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with the provisions of this Agreement, as of the date such Person becomes a
record holder of shares of Common Stock of the Company.
7.2 The Exercise Price for each one one-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
one hundred dollars ($100), shall be subject to adjustment from time to time as
provided in Section 11 and Section 13 hereof and shall be payable in lawful
money of the United States of America in accordance with Section 7.3 below.
7.3 As promptly as practicable following the Distribution
Date, the Company shall deposit with a corporation, trust, bank or similar
institution in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by a federal or state authority (such institution is hereinafter
referred to as the "Depositary Agent"), certificates representing the shares of
Preferred Stock that may be acquired upon exercise of the Rights and the Company
shall cause such Depositary Agent to enter into an agreement pursuant to which
the Depositary Agent shall issue receipts representing interests in the shares
of Preferred Stock so deposited. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied by payment of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20.11 hereof, thereupon promptly (a) requisition
from the Depositary Agent (or make available, if the Rights Agent is the
Depository Agent) depository receipts or certificates for the number of one
one-thousandths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes the Depositary Agent to comply with all such
requests, (b) when appropriate, requisition from the Company the amount of cash,
if any, to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (c) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (d) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash or distribute other
property pursuant to Section 11.1 hereof, the Company will make all arrangements
necessary so that such other securities, cash or other property are available
for distribution by the Rights Agent, if and when appropriate. The payment of
the Exercise Price may be made in cash or by certified or bank check payable to
the order of the Company, or by wire transfer of immediately available funds to
the account of the Company (provided that notice of such wire transfer shall be
given by the holder of the related Right to the Rights Agent).
7.4 In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
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delivered to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
7.5 Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11.1.2 Event or
Section 13 Event, any Rights beneficially owned by (a) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (b) a transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such or (c) a transferee
of an Acquiring Person (or of any Associate or Affiliate of an Acquiring Person)
who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (i) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, the shares of Common Stock of the Company
associated with such Rights or the Company, or (ii) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7.5, shall be null and void without any further action and no holder of
such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7.5 and
Section 4.2 hereof are complied with, but shall have no liability to any holder
of Right Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any Affiliates or
Associates of an Acquiring Person or any transferee of any of them hereunder.
7.6 Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (a) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (b) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
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 any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company.
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9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
9.1 The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock issuable upon exercise of all outstanding Rights in
excess of the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.
9.2 The Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance to be listed, upon official notice of
issuance, upon the principal national securities exchange, if any, upon which
the Common Stock of the Company is listed or, if the principal market for the
Common Stock of the Company is not on any national securities exchange, to be
eligible for quotation on the Nasdaq Stock Market ("Nasdaq") or any successor
thereto or other comparable quotation system.
9.3 The Company shall use its best efforts to (a) file,
as soon as practicable following the earliest date after the occurrence of a
Section 11.1.2 Event on which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with Section
11.1.3 hereof, or as soon as required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act, with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (b) cause such registration statement to become effective as soon as
practicable after such filing and (c) cause such registration statement to
remain effective (with a prospectus that at all times meets the requirements of
the Securities Act) until the earlier of (i) the date as of which the Rights are
no longer exercisable for such securities or (ii) the Expiration Date. The
Company will also take such action as may be appropriate under, and which will
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date
determined in accordance with the provisions of the first sentence of this
Section 9.3, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon such suspension,
the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect, in each case with prompt
written notice to the Rights Agent. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
9.4 The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates or depositary receipts for
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such shares (subject to payment of the Exercise Price), be duly and validly
authorized and issued and fully paid and nonassessable.
9.5 The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any certificates for shares of Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or in respect of the issuance or
delivery of securities in a name other than that of, the registered holder of
the Right Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for securities in a name other than that of the
registered holder upon the exercise of any Rights until 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.
10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Preferred Stock (including any fraction of a share of Preferred
Stock) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock represented
thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
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
Preferred Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
transfer books of the Company are open; and further provided, however, that if
delivery of shares of Preferred Stock is delayed pursuant to Section 9.3, such
Person shall be deemed to have become the record holder of such shares of
Preferred Stock only when such shares first become deliverable. Prior to the
exercise of the Right evidenced thereby, the holder of a Right Certificate shall
not be entitled to any rights of a shareholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
11.1
11.1.1 In the event the Company shall at any time
after the date of this Agreement (a) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (b) subdivide the outstanding Preferred
Stock, (c) combine the outstanding
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Preferred Stock into a smaller number of shares or (d) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11.1 and Section 7.5 hereof, the Exercise Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of a Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of a Right. If an event occurs which would require an
adjustment under both Section 11.1.1 and Section 11.1.2 hereof, the adjustment
provided for in this Section 11.1.1 shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11.1.2 hereof.
11.1.2 Subject to the provisions of Section 24
hereof, in the event any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person (a "Section 11.1.2 Event"), then
promptly following any such occurrence, proper provision shall be made so that
each holder of a Right, except as provided in Section 7.5 hereof, shall
thereafter have a right to receive, upon exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
shares of Preferred Stock of the Company as shall equal the result obtained by
(a) multiplying the then current Exercise Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11.1.2 Event, whether or
not such Right was then exercisable, and dividing that product by (b) 50% of the
Fair Market Value per one one-thousandth of a share of the Preferred Stock
(determined pursuant to Section 11.4) on the date of the occurrence of a Section
11.1.2 Event (such number of shares being referred to as the "Adjustment
Shares").
11.1.3 In lieu of issuing any shares of Preferred
Stock in accordance with Section 11.1.2 hereof, the Company, acting by or
pursuant to resolution of the Board of Directors, may, and in the event that the
number of shares of Preferred Stock which 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 not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing Section 11.1.2,
the Company, acting by or pursuant to resolution of the Board of Directors,
shall: (a) determine the excess of (i) the Fair Market Value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (ii) the
Exercise Price attributable to each Right (such excess being referred to as the
"Spread") and (b) with respect to all or a portion of each Right (subject to
Section 7.5 hereof), make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Exercise Price,
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(1) cash, (2) a reduction in the Exercise Price, (3) Preferred Stock Equivalents
which the Board of Directors has deemed to have the same value as shares of
Common Stock of the Company, (4) debt securities of the Company, (5) other
assets of the Company or (6) any combination of the foregoing which, when added
to any shares of Preferred Stock issued upon such exercise, has an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors; provided, however,
that if the Company shall not have made adequate provision to deliver value
pursuant to clause (b) above within thirty (30) days following the later of (x)
the first occurrence of a Section 11.1.2 Event and (y) the date on which the
Company's right of redemption pursuant to Section 23.1 expires (the later of (x)
and (y) being referred to herein as the "Section 11.1.2 Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, shares of Preferred
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Preferred Stock could be authorized for issuance upon
exercise in full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
Section 11.1.2 Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period, as it may
be extended, being referred to herein as the "Substitution Period"). To the
extent that the Company determines that some action need be taken pursuant to
the first and/or second sentences of this Section 11.1.2, the Company (1) shall
provide, subject to Section 7.5 hereof, that such action shall apply uniformly
to all outstanding Rights and (2) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and a public announcement at such time as the suspension
is no longer in effect. For purposes of this Section 11.1.3, the value of the
Preferred Stock shall be the Fair Market Value (as determined pursuant to
Section 11.4 hereof) per share of the Preferred Stock on the Section 11.1.2
Trigger Date and the value of any Preferred Stock Equivalent shall be deemed to
have the same value as the Preferred Stock on such date.
11.2 If the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within forty-five (45) calendar days after
such record date) to subscribe for or purchase Preferred Stock (or securities
having the same or more favorable rights, privileges and preferences as the
shares of Preferred Stock ("Preferred Stock Equivalents")) or securities
convertible into Preferred Stock or Preferred Stock Equivalents at a price per
share of Preferred Stock or per share of Preferred Stock Equivalents (or having
a conversion price per share, if a security convertible into Preferred Stock or
Preferred Stock Equivalents) less than the Fair Market Value (as determined
pursuant to Section 11.4 hereof) per share of Preferred Stock on such record
date, the Exercise Price to be in effect after such record date shall be
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determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Preferred Stock Equivalents to be offered (and the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Fair Market Value and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and Preferred
Stock Equivalents to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of a Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of a Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be the Fair Market Value
thereof determined in accordance with Section 11.4 hereof. Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments 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 which would then be in effect if such record date had
not been fixed.
11.3 If the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11.2, 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 the Fair Market Value (as determined pursuant to Section 11.4
hereof) per one one-thousandth of a share of Preferred Stock on such record
date, less the Fair Market Value (as determined pursuant to Section 11.4 hereof)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such convertible securities, subscription rights or warrants
applicable to one one-thousandth of a share of Preferred Stock and the
denominator of which shall be the Fair Market Value (as determined pursuant to
Section 11.4 hereof) per one one-thousandth of a share of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of a Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of a Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price which would be in effect if such record date
had not been fixed.
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11.4 For the purpose of this Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or any
Right or other security or any other property shall be determined as provided in
this Section 11.4.
11.4.1 In the case of a publicly-traded stock or
other security, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such stock or per unit of such
other security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any share of stock is determined during
a period following the announcement by the issuer of such stock of (a) a
dividend or distribution on such stock payable in shares of such stock or
securities convertible into shares of such stock or (b) any subdivision,
combination or reclassification of such stock, and prior to the expiration of
the 30 Trading Day period after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Fair Market Value shall be
properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any national
securities exchange, the last sale price as reported by Nasdaq for securities
listed on the Nasdaq National Market or, in case no such sale takes place on
such day, the average of the closing bid and asked prices as reported by Nasdaq;
or, if not listed or admitted to trading on a national securities exchange or
the Nasdaq National Market, the last quoted price (or, if not so quoted, the
average of the last quoted high bid and low asked prices) in the
over-the-counter market, as reported by Nasdaq or such other system then in use;
or, if on any such date no bids for such security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the Board
of Directors of the Company. If on any such date no market maker is making a
market in such security, the Fair Market Value of such security on such date
shall be determined reasonably and with utmost good faith to the holders of the
Rights by the Board of Directors of the Company, provided, however, that if at
the time of such determination there is an Acquiring Person, the Fair Market
Value of such security on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or admitted to
trading on any national securities exchange, a Business Day.
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11.4.2 If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value per share of
stock or per other unit of such security, determined reasonably and with utmost
good faith to the holders of the Rights by the Board of Directors of the
Company, provided, however, that if at the time of such determination there is
an Acquiring Person, the Fair Market Value of such security on such date shall
be determined by a nationally recognized investment banking firm selected by the
Board of Directors, which determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights; provided, however, that for the purposes of making any adjustment
provided for by Section 11.1.2 hereof, the Fair Market Value of a share of
Preferred Stock shall not be less than the product of the then Fair Market Value
of a share of Common Stock multiplied by the higher of the then Dividend
Multiple or Vote Multiple (as both of such terms are defined in the Certificate
of Designation attached as Exhibit A hereto) applicable to the Preferred Stock
and shall not exceed 105% of the product of the then Fair Market Value of a
share of Common Stock multiplied by the higher of the then Dividend Multiple or
Vote Multiple applicable to the Preferred Stock.
11.4.3 In the case of property other than
securities, the Fair Market Value thereof shall be determined reasonably and
with utmost good faith to the holders of Rights by the Board of Directors of the
Company, provided, however, that if at the time of such determination there is
an Acquiring Person, the Fair Market Value of such property on such date shall
be determined by a nationally recognized investment banking firm selected by the
Board of Directors, which determination shall be described in a statement filed
with the Rights Agent and shall be binding upon the Rights Agent and the holders
of the Rights.
11.5 Anything herein to the contrary notwithstanding, 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 which by reason of this Section 11.5 are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest hundred-thousandth of a share of Common Stock
of the Company or ten-millionth of a share of Preferred Stock, as the case may
be, or to such other figure as the Board of Directors may deem appropriate.
Notwithstanding the first sentence of this Section 11.5, any adjustment required
by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
11.6 If as a result of any provision of Section 11.1 or
Section 13.1 hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11.1 through 11.5, Sections
11.7 through 11.11, and Section 11.13, inclusive, and the provisions of Sections
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7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.
11.7 All Rights originally issued by the Company
subsequent to any adjustment made to the Exercise Price hereunder shall evidence
the right to purchase, at the adjusted Exercise Price, the number of one
one-thousandths of a share of Preferred Stock (or other securities or amount of
cash or combination thereof) purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
11.8 Unless the Company shall have exercised its election
as provided in Section 11.9, upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-millionth) as the Board of Directors reasonably determines is appropriate to
preserve the economic value of the Rights, including, by way of example, that
number obtained by (a) multiplying (i) the number of one one-thousandths of a
share of Preferred Stock for which a Right may be exercisable immediately prior
to this adjustment by (ii) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (b) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment of the
Exercise Price.
11.9 The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by dividing the Exercise Price in
effect immediately prior to adjustment of the Exercise Price by the Exercise
Price in effect immediately after adjustment of the Exercise Price. The Company
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11.9, the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such
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adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted 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.
11.10 Irrespective of any adjustment or change in the
Exercise Price or the number of one one-thousandths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Exercise Price per
share and the number of shares which were expressed in the initial Right
Certificates issued hereunder without prejudice to any adjustment or change.
11.11 Before taking any action that would cause an
adjustment reducing the Exercise Price below the then stated value, if any, of
the number of one one-thousandths of a share of Preferred Stock issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred Stock
at such adjusted Exercise Price.
11.12 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 issuing to the holder of any Right exercised after such record
date the number of one one-thousandths of a share of Preferred Stock or other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
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 evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
11.13 Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority of
the Board of Directors shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly for cash of
any shares of Preferred Stock at less than the Fair Market Value, issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such shareholders.
11.14 The Company covenants and agrees that it shall not,
at any time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (a) consolidate with (other than a Subsidiary of the Company in a
transaction which complies with the proviso at the
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end of this sentence), (b) merge with or into, or (c) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries taken as a whole, to
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with the proviso
at the end of this sentence) if (i) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments outstanding or agreements or arrangements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, or (ii) prior to, simultaneously with or immediately
after such consolidation, merger or sale the shareholders of a Person who
constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13.1 hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates; provided, however,
that this Section 11.14 shall not affect the ability of any Subsidiary of the
Company to consolidate with, merge with or into, or sell or transfer assets or
earning power to, any other Subsidiary of the Company. The Company further
covenants and agrees that after the Distribution Date it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
11.15 Notwithstanding anything in this Agreement to the
contrary, in the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (a) declare or pay any dividend on
the outstanding Common Stock of the Company payable in shares of Common Stock of
the Company or (b) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the Company)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (i) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock of the Company
outstanding immediately prior to such event and the denominator of which is the
number of shares of Common Stock of the Company outstanding immediately after
such event, and (ii) each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11.15 shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
11.16 The exercise of Rights under Section 11.1.2 shall
only result in the loss of rights under Section 11.1.2 to the extent so
exercised and shall not otherwise affect the rights of holders of Right
Certificates under this Rights Agreement, including rights to
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purchase securities of the Principal Party following a Section 13 Event which
has occurred or may thereafter occur, as set forth in Section 13 hereof. Upon
exercise of a Right Certificate under Section 11.1.2, the Rights Agent shall
return such Right Certificate duly marked to indicate that such exercise has
occurred.
12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock of the Company a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS.
13.1 In the event that, following the Stock Acquisition
Date, directly or indirectly, (a) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11.14 hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (b) any Person (other than a Subsidiary of the Company in a transaction
which is not prohibited by the proviso at the end of the first sentence of
Section 11.14 hereof) shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock of the Company shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (c) the
Company shall sell, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by the proviso at the end of the first sentence of Section 11.14
hereof), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7.5 hereof, shall have
the right to receive, upon the exercise thereof at the then current Exercise
Price in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid and nonassessable shares of freely tradeable
Common Stock of the Principal Party (as hereinafter defined in Section 13.2),
free and clear of rights of call or first refusal, liens, encumbrances, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (x) multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event, and dividing
that product by (y) 50% of the Fair Market Value (determined pursuant to Section
11.4 hereof) per share of the Common Stock of
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such Principal Party on the date of consummation of such consolidation, merger,
sale or transfer; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale, mortgage or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply to such Principal Party; and (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13.1 and the making of
payments in cash and/or other securities in accordance with Section 11.1.3
hereof) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights.
13.2 "Principal Party" shall mean (a) in the case of any
transaction described in clause (a) or (b) of the first sentence of Section
13.1, the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger or consolidation, or,
if there is more than one such issuer, the issuer of Common Stock that has the
highest aggregate Fair Market Value (determined pursuant to Section 11.4), and
if no securities are so issued, the Person that is the other party to the merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate Fair Market Value (determined
pursuant to Section 11.4); and (b) in the case of any transaction described in
clause (c) of the first sentence of Section 13.1, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or if the
Person receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the highest aggregate
Fair Market Value (determined pursuant to Section 11.4); provided, however, that
in any such case, (i) if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act ("Registered Common Stock") or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary or Affiliate
of another Person who has Registered Common Stock outstanding, "Principal Party"
shall refer to such other Person; (ii) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (iii) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate Fair Market Value (determined pursuant
to Section 11.4); and (iv) if the Common Stock
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of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, "Principal Party" shall refer to
whichever ultimate parent entity is the entity having the greatest net assets.
13.3 The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto (a) the Principal
Party shall have a sufficient number of authorized shares of its Common Stock,
which have not been issued or reserved for issuance, to permit the exercise in
full of the Rights in accordance with this Section 13, and (b) the Company and
each Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Sections 13.1 and 13.2 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13.1, the Principal Party at its own expense will:
13.3.1 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
reasonable best efforts to cause such registration statement to become effective
as soon as practicable after such filing and use its reasonable best efforts to
cause such registration statement to remain effective (with a prospectus that at
all times meets the requirements of the Securities Act) until the Expiration
Date;
13.3.2 use its reasonable best efforts to qualify
or register the Rights and the securities purchasable upon exercise of the
Rights under the blue sky laws of such jurisdictions as may be necessary or
appropriate;
13.3.3 use its reasonable best efforts to list (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on a national securities exchange or to meet the eligibility
requirements for quotation on Nasdaq; and
13.3.4 deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
13.4 In case the Principal Party which is to be a party to
a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (a) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current Fair Market
Value (determined pursuant to Section 11.4) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such Fair
Market Value, or (b) providing for any
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special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1 The Company shall not be required to issue fractions
of Rights, except prior to the Distribution Date as provided in Section 11.15
hereof, or to distribute Right Certificates which evidence fractional Rights. If
the Company elects not to issue such fractional Rights, the Company shall pay,
in lieu of such fractional Rights, to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Fair Market Value
of a whole Right, as determined pursuant to Section 11.4 hereof.
14.2 The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-thousandth of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the Fair Market Value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14.2, the Fair Market Value of one
one-thousandth of a share of Preferred Stock shall be determined pursuant to
Section 11.4 hereof for the Trading Day immediately prior to the date of such
exercise.
14.3 The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (or, prior to the Distribution Date, the registered
holders of the Common Stock of the Company); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock of
the Company), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common Stock
of the Company), may, in such registered holder's own behalf and for such
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registered holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Right evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
16.1 prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock of the Company;
16.2 after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
16.3 subject to Sections 6.1 and 7.6, the Company and the
Rights Agent may deem and treat the person in whose name a Right Certificate
(or, prior to the Distribution Date, the associated certificate representing
Common Stock of the Company) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated certificate representing
Common Stock of the Company made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and, subject to the last sentence of Section
7.5, neither the Company nor the Rights Agent shall be affected by any notice to
the contrary; and
16.4 notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as the result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
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17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
18.1 The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom, directly
or indirectly. The provisions of this Section 18.1 shall survive the expiration
of the Rights and the termination of this Agreement.
18.2 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 representing Common Stock of the Company, Preferred
Stock, or 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 in good faith
and without negligence to be genuine and to be signed and executed by the proper
Person or Persons.
18.3 The Rights Agent shall not be liable for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS.
19.1 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
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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 shareholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
19.2 In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
20.1 The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
20.2 Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Fair Market Value") 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 shall be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board of Directors, a Vice Chairman of the Board of Directors, the
President, a Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full
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authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
20.3 The Rights Agent shall be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
20.4 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.
20.5 The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 7.5 hereof)
or any adjustment required under the provisions of Sections 11, 13 or 23.3
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate describing any such adjustment
furnished in accordance with Section 12 hereof), nor shall it be responsible for
any determination by the Board of Directors of the Company of the Fair Market
Value of the Rights or Preferred Stock pursuant to the provisions of Section 14
hereof; nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
of the Company or Preferred Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Common Stock of the Company or
Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
20.6 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.
20.7 The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, any Vice
Chairman of the Board of Directors, the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, and is authorized 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
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34
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
20.8 The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
20.9 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.
20.10 No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
20.11 If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause (1) or
clause (2) thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.
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 thirty (30) days' notice in writing mailed to the Company by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock of the Company and Preferred Stock by 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
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35
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the incumbent Rights
Agent or the registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of the Commonwealth of Massachusetts (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 Commonwealth of Massachusetts), in good standing,
which is authorized under such laws to exercise stock transfer or corporate
trust powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock of the Company and the Preferred
Stock, 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.
22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Exercise Price per share and the number or kind or class of shares of stock
or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock of the Company following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock of the Company so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities
hereafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the person to whom such Right
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Certificate would be issued, and (ii) no such Right Certificate shall be issued
if, and to the extent that, appropriate adjustments shall otherwise have been
made in lieu of the issuance thereof.
23. REDEMPTION.
23.1 The Board of Directors of the Company may, at its
option, redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.001 per Right, appropriately adjusted to reflect any
dividend declared or paid on the Common Stock of the Company in shares of Common
Stock of the Company or any subdivision or combination of the outstanding shares
of Common Stock of the Company or similar event occurring after the date of this
Agreement (such redemption price, as adjusted from time to time, being
hereinafter referred to as the "Redemption Price"). The Rights may be redeemed
only until the earlier to occur of (i) 5:00 P.M., Boston, Massachusetts time, on
the tenth calendar day after the Stock Acquisition Date or (ii) the Final
Expiration Date.
23.2 Immediately upon the action of the Board of Directors
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to the Rights Agent and to all such holders at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer Agent
for the Common Stock of the Company. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
or Section 24 hereof or in connection with the purchase of shares of Common
Stock of the Company prior to the Distribution Date.
23.3 The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock of the Company (based on the Fair Market
Value of the Common Stock of the Company as of the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
24. EXCHANGE.
24.1
24.1.1 The Board of Directors of the Company may,
at its option, at any time on or after the Distribution Date, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 7.5 hereof)
for shares of Common Stock of the Company at an
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exchange ratio of one share of Common Stock of the Company per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Section 24.1.1 Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock of the Company.
24.1.2 Notwithstanding the foregoing, the Board of
Directors of the Company may, at its option, at any time on or after the
Distribution Date, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 7.5 hereof) for shares of Common Stock of the Company at
an exchange ratio specified in the following sentence, as appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement. Subject to the adjustment described in the
foregoing sentence, each Right may be exchanged for that number of shares of
Common Stock of the Company obtained by dividing the Spread (as defined in
Section 11.1.3) by the then Fair Market Value per one one-thousandth of a share
of Preferred Stock on the earlier of (a) the date on which any person becomes an
Acquiring Person or (b) the date on which a tender or exchange offer by any
Person (other than an Exempt Person) is first published or sent or given within
the meaning of Rule 14d-4(a) of the Exchange Act or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of more than 20%
of the shares of Common Stock of the Company then outstanding (such exchange
ratio being referred to herein as the "Section 24.1.2 Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Stock of the
Company.
24.2 Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
of the Company equal to the number of such Rights held by such holder multiplied
by the Section 24.1.1 Exchange Ratio or the Section 24.1.2 Exchange Ratio, as
applicable. The Company shall promptly give notice of any such exchange in
accordance with Section 26 hereof and shall promptly mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of Common
Stock of the Company for Rights will be effected and, in the event of any
partial exchange, the number of Rights
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which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7.5 hereof) held by each holder of Rights.
24.3 In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Stock (or Preferred Stock
Equivalent, as such term is defined in Section 11.2 hereof) for Common Stock of
the Company exchangeable for Rights, at the initial rate of one one-thousandth
of a share of Preferred Stock (or Preferred Stock Equivalent) for each share of
Common Stock of the Company, as appropriately adjusted to reflect adjustments in
the voting rights of the Preferred Stock pursuant to the terms thereof, so that
the fraction of a share of Preferred Stock delivered in lieu of each share of
Common Stock of the Company shall have the same voting rights as one share of
Common Stock of the Company.
24.4 In the event that there shall not be sufficient
shares of Common Stock of the Company or Preferred Stock (or Preferred Stock
Equivalent) issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock of the Company or Preferred Stock (or Preferred Stock
Equivalent) for issuance upon exchange of the Rights.
24.5 The Company shall not be required to issue fractions
of Common Stock of the Company or to distribute certificates which evidence
fractional shares of Common Stock of the Company. If the Company elects not to
issue such fractional shares of Common Stock of the Company, the Company shall
pay, in lieu of such fractional shares of Common Stock of the Company, to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock of the Company would otherwise be issuable, an
amount in cash equal to the same fraction of the Fair Market Value of a whole
share of Common Stock of the Company. For the purposes of this Section 24.5, the
Fair Market Value of a whole share of Common Stock of the Company shall be the
closing price of a share of Common Stock of the Company (as determined pursuant
to the second sentence of Section 11.4.1 hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
25. NOTICE OF CERTAIN EVENTS.
25.1 In case the Company shall propose, at any time after
the Distribution Date, to (a) pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the holders
of Preferred Stock (other than a regular periodic cash dividend out of earnings
or retained earnings of the Company), (b) offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (c) effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (d) effect any consolidation or merger into or with, or to
effect any sale, mortgage or other transfer (or to permit one or more of its
Subsidiaries to effect any sale,
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mortgage or other transfer), in one transaction or a series of related
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than a
Subsidiary of the Company in one or more transactions each of which is not
prohibited by the proviso at the end of the first sentence of Section 11.14
hereof), (e) effect the liquidation, dissolution or winding up of the Company,
or (f) declare or pay any dividend on the Common Stock of the Company payable in
Common Stock of the Company or to effect a subdivision, combination or
consolidation of the Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in Common Stock of the Company) then in
each such case, the Company shall give to each holder of a Right Certificate and
to the Rights Agent, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock of the Company and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b above at least
twenty (20) days prior to the record date for determining holders of the shares
of Preferred Stock for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock of the Company and/or Preferred Stock, whichever shall be
the earlier; provided, however, no such notice shall be required pursuant to
this Section 25 as a result of any Subsidiary of the Company effecting a
consolidation or merger with or into, or effecting a sale or other transfer of
assets or earnings power to, any other Subsidiary of the Company in a manner not
inconsistent with the provisions of this Agreement.
25.2 In case any Section 11.1.2 Event shall occur, then,
in any such case, the Company shall as soon as practicable thereafter give to
each registered holder of a Right Certificate and to the Rights Agent, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11.1.2 hereof.
26. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, by facsimile transmission or by nationally recognized
overnight courier addressed (until another address is filed in writing with the
Rights Agent) as follows:
Tweeter Home Entertainment Group, Inc.
00 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate
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to or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, by facsimile transmission or by
nationally-recognized overnight courier addressed (until another address is
filed in writing with the Company) as follows:
[_____________]
[______________________]
[______________________]
[______________________]
[______________________]
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate (or,
prior to the Distribution Date, to the holder of any certificate representing
shares of Common Stock of the Company) 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.
27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement as the Company may deem necessary or
desirable without the approval of any holders of certificates representing
shares of Common Stock of the Company. From and after the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holder of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or any Affiliate or Associate of an Acquiring Person); provided, however, that
from and after the Distribution Date this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person). Upon the delivery of such
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock of the Company.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 27 which
alters the Rights Agent's rights or duties.
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41
28. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock of the Company outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Common
Stock of the Company of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Rules under
the Exchange Act as in effect on the date hereof. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including without limitation, the right and
power to (a) interpret the provisions of this Agreement and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (ii) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (ii) not subject any
member of the Board of Directors to any liability to the holders of the Rights
or to any other person.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock of the Company).
31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.
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42
32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and to be performed entirely within such state. The courts of the State
of Delaware and of the United States of America located in the State of Delaware
(the "Delaware Courts") shall have exclusive jurisdiction over any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby, and any Person commencing or otherwise involved in any such litigation
shall waive any objection to the laying of venue of such litigation in the
Delaware Courts and shall not plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.
33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
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43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TWEETER HOME ENTERTAINMENT GROUP, INC.
By:
---------------------------------
Name:
Title:
[________________]
By:
---------------------------------
Name:
Title:
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44
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
TWEETER HOME ENTERTAINMENT GROUP, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
TWEETER HOME ENTERTAINMENT GROUP, INC. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), DOES HEREBY CERTIFY:
That the following resolution was duly adopted by the Board of
Directors of the Company, pursuant to the authority conferred upon the Board of
Directors by Article IV, Section C of the Company's Amended and Restated
Certificate of Incorporation and the provisions of Section 151 of the DGCL, at a
duly called meeting of the Board of Directors held on _____________, 1998:
RESOLVED: That the Board of Directors hereby designates 200,000 shares of the
Company's Preferred Stock, $.01 par value, as Series A Junior
Participating Cumulative Preferred Stock with the designations,
powers, preferences, and relative, participating, optional or other
rights, and the qualifications, limitations or restrictions thereof,
set forth on EXHIBIT 1 hereto.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be executed by _________________, its ___________.
TWEETER HOME ENTERTAINMENT GROUP, INC.
By:
----------------------------------------
Name:
Title:
45
EXHIBIT 1
DESIGNATIONS, POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
TWEETER HOME ENTERTAINMENT GROUP, INC.
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock," $.01
par value, (hereinafter called "Series A Preferred Stock"), and the number of
shares initially constituting such series shall be 200,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors and
by the filing of a certificate pursuant to the provisions of the General
Corporation Law of the State of Delaware stating that such increase or reduction
has been so authorized; provided, however, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares of Series A Preferred Stock
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) (i) Subject to the rights of the holders of any
shares of any series of preferred stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of shares of
Common Stock and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provisions
for adjustment hereinafter set forth, 1,000 times the aggregate per share amount
of all cash dividends, and 1,000 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the shares of
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. The
multiple of cash and non-cash dividends declared on the shares of Common Stock
to which
46
holders of the Series A Preferred Stock are entitled, which shall be 1,000
initially but which shall be adjusted from time to time as hereinafter provided,
is hereinafter referred to as the "Dividend Multiple." In the event the
Corporation shall at any time after __________, 1998 (the "Rights Declaration
Date") (i) declare or pay any dividend on the shares of Common Stock payable in
shares of Common Stock, or (ii) effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
Dividend Multiple thereafter applicable to the determination of the amount of
dividends which holders of shares of Series A Preferred Stock shall be entitled
to receive shall be the Dividend Multiple applicable immediately prior to such
event multiplied by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(ii) Notwithstanding anything else contained in
this paragraph (A), the Corporation shall, out of funds legally available for
that purpose, declare a dividend or distribution on the Series A Preferred Stock
as provided in this paragraph (A) immediately after it declares a dividend or
distribution on the shares of Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or distribution
shall have been declared on the shares of Common Stock during the period between
any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix in accordance with applicable law a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than such number of days prior to the date fixed for the
payment thereof as may be allowed by applicable law.
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SECTION 3. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the stockholders of
the Corporation. The number of votes which a holder of a share of Series A
Preferred Stock is entitled to cast, which shall initially be 1,000 but which
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Vote Multiple." In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare or pay any dividend on shares
of Common Stock payable in shares of Common Stock, or (ii) effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series A Preferred Stock
shall be entitled shall be the Vote Multiple immediately prior to such event
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock and the holders of shares of any other capital stock of this
Corporation having general voting rights, shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable
on any shares of Series A Preferred Stock shall be in arrears in an amount equal
to at least two full quarter dividends (whether or not declared and whether or
not consecutive), the holders of record of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation or at the Corporation's next annual meeting of
stockholders, and at each subsequent annual meeting of stockholders, as provided
below. At elections for such directors, each Series A Preferred Share shall
entitle the holder thereof to 1,000 votes in such elections.
(ii) Upon the vesting of such right of the
holders of shares of Series A Preferred Stock, the maximum authorized number of
members of the Board of Directors shall automatically be increased by two and
the two vacancies so created shall be filled by vote of the holders of the
outstanding shares of Series A Preferred Stock as hereinafter set forth. A
special meeting of the stockholders of the Corporation then entitled to vote
shall be called by the Chairman of the Board of Directors or the President or
the Secretary of the Corporation, if requested in writing by the holders of
record of not less than 10% of the shares of Series A Preferred Stock then
outstanding. At such special
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48
meeting, or, if no such special meeting shall have been called, then at the next
annual meeting of stockholders of the Corporation, the holders of the shares of
Series A Preferred Stock shall elect, voting as above provided, two directors of
the Corporation to fill the aforesaid vacancies created by the automatic
increase in the number of members of the Board of Directors. At any and all such
meetings for such election, the holders of a majority of the outstanding shares
of Series A Preferred Stock shall be necessary to constitute a quorum for such
election, whether present in person or proxy, and such two directors shall be
elected by the vote of at least a majority of the shares of Series A Preferred
Stock held by such stockholders present or represented at the meeting. Any
director elected by holders of shares of Series A Preferred Stock pursuant to
this Section may be removed at any annual or special meeting, by vote of a
majority of the stockholders voting as a class who elected such director, with
or without cause. In case any vacancy shall occur among the directors elected by
the holders of shares of Series A Preferred Stock pursuant to this Section, such
vacancy may be filled by the remaining director so elected, or his successor
then in office, and the director so elected to fill such vacancy shall serve
until the next meeting of stockholders for the election of directors. After the
holders of shares of Series A Preferred Stock shall have exercised their right
to elect directors in any default period and during the continuance of such
period, the number of directors shall not be further increased or decreased
except by vote of the holders of shares of Series A Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series A Preferred Stock.
(iii) The right of the holders of shares of Series
A Preferred Stock, voting separately as a class, to elect two members of the
Board of Directors of the Corporation as aforesaid shall continue until, and
only until, such time as all arrears in dividends (whether or not declared) on
the Series A Preferred Stock shall have been paid or declared and set apart for
payment, at which time such right shall terminate, except as herein or by law
expressly provided subject to revesting in the event of each and every
subsequent default of the character above-mentioned. Upon any termination of the
right of the holders of the Series A Preferred Stock as a class to vote for
directors as herein provided, the term of office of all directors then in office
elected by the holders of shares of Series A Preferred Stock pursuant to this
Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of shares of Series A Preferred Stock pursuant
to this Section shall terminate and the special voting powers vested in the
holders of the Series A Preferred Stock pursuant to this Section shall have
expired, the maximum number of members of this Board of Directors of the
Corporation shall be such number as may be provided for in the By-laws of the
Corporation, irrespective of any increase made pursuant to the provisions of
this Section.
(D) Except as otherwise required by applicable law or as
set forth herein, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with holders of shares of Common Stock as set forth herein)
for taking any corporate action.
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SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever dividends or distributions payable on the
Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not: (i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii)
declare or pay dividends on or make any other distributions on any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; (iii) except as permitted in
subsection 4(A)(iv) below, redeem, purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or (iv) purchase or
otherwise acquire for consideration any shares of Series A Preferred Stock, or
any shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subsection (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (a) to the holders of shares of stock
ranking junior (either as to dividends or
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50
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, plus an amount
equal to the greater of (1) $1,000.00 per share or (2) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (b) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare or pay any dividend on
shares of Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (a) of this paragraph shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Neither the consolidation of nor merging of the Corporation with or
into any other corporation or corporations, nor the sale or other transfer of
all or substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 6.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged,
plus accrued and unpaid dividends, if any, payable with respect to the Series A
Preferred Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on shares of Common Stock
payable in shares of Common Stock, or (ii) effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common
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51
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 8. REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable; provided, however, that the foregoing shall not limit the ability
of the Corporation to purchase or otherwise deal in such shares to the extent
otherwise permitted hereby and by law.
SECTION 9. RANKING. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Designation relating to a
subsequently-designated series of preferred stock of the Corporation, the Series
A Preferred Stock shall rank junior to any other series of the Corporation's
preferred stock subsequently issued, as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and shall rank
senior to the Common Stock.
SECTION 10. AMENDMENT. The Certificate of Incorporation and this
Certificate of Designation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
SECTION 11. FRACTIONAL SHARES. Shares of Series A Preferred Stock may
be issued in whole shares or in any fraction of a share that is one
one-thousandth (1/1,000th) of a share or any integral multiple of such fraction,
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of shares
of Series A Preferred Stock. In lieu of fractional shares, the Corporation may
elect to make a cash payment as provided in the Rights Agreement for fractions
of a share other than one one-thousandth (1/1,000th) of a share or any integral
multiple thereof.
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EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- [Number] Rights
----------
NOT EXERCISABLE AFTER ___________, 200__ OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF TWEETER HOME
ENTERTAINMENT GROUP, INC., AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
SHAREHOLDER RIGHTS AGREEMENT BETWEEN TWEETER HOME ENTERTAINMENT GROUP, INC. AND
_____________, AS RIGHTS AGENT, DATED AS OF _________, 1998 (THE "RIGHTS
AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION 7.5 OF THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
TWEETER HOME ENTERTAINMENT GROUP, INC.
RIGHT CERTIFICATE
This certifies that ________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Shareholder Rights Agreement dated as of , 199 (the "Rights Agreement") between
TWEETER HOME ENTERTAINMENT GROUP, INC. (the "Company") and RIGHTS AGENT , as
Rights Agent (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to the close of business on _________, 200__ at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-thousandth of a fully paid, non-assessable share of Series A
Junior Participating Cumulative Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $___ per one one-thousandth of a share (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and the related Certificate duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Exercise Price per share set forth above, are the number and Exercise Price as
of , based on the shares of Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (a) an Acquiring Person or an Affiliate or Associate of
any such Person (as such terms are defined in the Rights Agreement), (b) a
transferee of any such Acquiring
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53
Person, Associate or Affiliate, or (c) under certain circumstances specified in
the Rights Agreement, a transferee of a Person who, after such transfer, became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11.1.2
Event.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section 11.1.2 of
the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for shares of the
Company's Common Stock or Preferred Stock at an exchange ratio (subject to
adjustment) of one share of Common Stock or one one-thousandth of a share of
Preferred Stock per Right.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $0.001 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors).
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54
The Company is not obligated to issue fractional shares of stock upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts).
If the Company elects not to issue such fractional shares, in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock, Common Stock or any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Corporate Seal
TWEETER HOME ENTERTAINMENT COUNTERSIGNED:
GROUP, INC.
_________________, as Rights Agent
By: By:
-------------------------------- ------------------------------
Name: Name:
Title: Title:
Attest: Authorized Signatory
Date of countersignature:_________
------------------------------------
Name:
Title:
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfers unto (Please print name and address of transferee) this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________________________ as
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
Signature:___________________________
Printed name:________________________
Signature Guaranteed:
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56
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are
not being transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned ___did ___did not directly or indirectly acquire
the Rights evidenced by this Right Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of any such Person.
Dated:
Signature:________________________
Printed name:_____________________
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NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To TWEETER HOME ENTERTAINMENT GROUP, INC.:
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name
of _________________________:
Please insert social security or other identifying taxpayer number:
________________________________
________________________________
________________________________
________________________________
________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate or if the Rights are being exercised pursuant to Section 11.1.2 of
the Rights Agreement, a new Right Certificate for the balance of such Rights
shall be registered in the name of and delivered to ____________________: Please
insert social security or other identifying taxpayer number:
Please insert social security or other identifying taxpayer number:
________________________________
________________________________
________________________________
________________________________
________________________________
(Please print name and address)
Signature:______________________
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned ___did ___did not directly or indirectly acquire
the Rights evidenced by this Right Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of any such Person.
Dated:
Signature:________________________
Printed name:_____________________
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NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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