Exhibit 1
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ACT TELECONFERENCING, INC.
and
AMERICAN SECURITIES TRANSFER & TRUST, INC.
Rights Agent
Rights Agreement
Dated as of November 18, 1999
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions.................................................... 1
Section 2. Appointment of Rights Agent............................................ 5
Section 3. Issue of Right Certificates............................................ 5
Section 4. Form of Right Certificates............................................. 7
Section 5. Countersignature and Registration...................................... 8
Section 6. Transfer, Split-Up, Combination and Exchange of Right Certificates;
Lost, Stolen, Destroyed or Mutilated Right Certificates................ 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.......... 9
Section 8. Cancellation and Destruction of Right Certificates..................... 10
Section 9. Reservation and Availability of Preferred Shares....................... 11
Section 10. Preferred Shares Record Date........................................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights................................................................. 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............. 21
Section 13. Consolidation, Merger, Statutory Share Exchange or Sale or Transfer
of Assets or Earning Power............................................. 21
Section 14. Fractional Rights and Fractional Shares................................ 24
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Section 15. Rights of Action...................................................... 25
Section 16. Agreement of Right Holders............................................ 26
Section 17. Right Certificate Holder Not Deemed a Shareholder..................... 26
Section 18. Concerning the Rights Agent........................................... 27
Section 19. Merger or Consolidation or Change of Name of Rights Agent............. 27
Section 20. Duties of Rights Agent................................................ 28
Section 21. Change of Rights Agent................................................ 30
Section 22. Issuance of New Right Certificates.................................... 31
Section 23. Redemption............................................................ 31
Section 24. Exchange.............................................................. 32
Section 25. Notice of Certain Events.............................................. 34
Section 26. Notices............................................................... 34
Section 27. Supplements and Amendments............................................ 35
Section 28. Successors............................................................ 36
Section 29. Benefits of this Agreement............................................ 36
Section 30. Severability.......................................................... 36
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Section 31. Governing Law......................................................... 36
Section 32. Counterparts.......................................................... 37
Section 33. Descriptive Headings.................................................. 37
Exhibit A -- Articles of Amendment to the Articles of Incorporation of the
Company Setting Forth the Designations, Preferences and Rights of
Series B Junior Participating Preferred Shares
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
Agreement, dated as of November 18, 1999 between ACT TELECONFERENCING,
INC., a Colorado corporation (the "Company"), and AMERICAN SECURITIES TRANSFER &
TRUST, INC., as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as hereinafter defined) of the
Company outstanding at the Close of Business on December 10, 1999 (the "Record
Date"), each Right initially representing the right to purchase one one-
hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions set forth herein, and has further authorized the
issuance of one Right (as such number may hereafter be adjusted pursuant to the
provisions of Section 11 hereof) with respect to each Common Share that shall
become outstanding (i) at any time between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined) or (ii) upon the exercise or conversion, prior to
the earlier of the Redemption Date or the Final Expiration Date, of any option
or other security exercisable for or convertible into Common Shares, which
option or other such security is outstanding on the Distribution Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the Common Shares
of the Company then outstanding, but shall not include (i) the Company, (ii) any
wholly owned Subsidiary (as such term is hereinafter defined) of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any entity holding Common Shares for or pursuant to the terms of
any such plan described in clause (iii) of this sentence, or (v) any Person who,
as of the Close of Business on the date hereof, is the Beneficial Owner of 19%
or more of the Common Shares of the Company currently outstanding; provided,
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however, that if such a Person becomes the Beneficial Owner of a percentage of
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the Company's outstanding Common Shares equal to the sum of 1% plus that
Person's percentage ownership as of the Close of Business on the date hereof,
then that Person shall be deemed an "Acquiring Person." Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares
Exhibit 1
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 20% or more (or, in the case of a Person described in clause (v)
of this paragraph (a), to at least the percentage calculated under the proviso
to that clause) of the Common Shares of the Company then outstanding; provided,
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however, that if a Person, together with all Affiliates or Associates of such
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Person, shall become the Beneficial Owner of 20% or more (or, in the case of a
Person described in clause (v) of this paragraph (a), of at least the percentage
calculated under the proviso to that clause) of the Common Shares of the Company
then outstanding by reason of share acquisitions by the Company and if such
Person or such Person's Affiliates or Associates, after such share acquisitions
by the Company, shall become the Beneficial Owner of any additional Common
Shares of the Company, and, immediately after becoming the Beneficial Owner of
such additional Common Shares, such Person, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more (or, in
the case of a Person described in clause (v) of this paragraph (a), of at least
the percentage calculated under the proviso to that clause) of the Common Shares
of the Company then outstanding, then such Person (unless such Person shall be
(1) the Company, (2) any wholly owned Subsidiary of the Company, (3) any
employee benefit plan of the Company or of any Subsidiary of the Company, or (4)
any entity holding Common Shares for or pursuant to the terms of any such plan
described in clause (3) of this sentence) shall be deemed an "Acquiring Person."
An entity other than the Company or any wholly owned Subsidiary of the Company
holding Common Shares for or pursuant to the terms of an employee benefit plan
of the Company or of any Subsidiary of the Company and in addition being the
Beneficial Owner of Common Shares that are not held for or pursuant to the terms
of any such plan shall be deemed to constitute an Acquiring Person,
notwithstanding anything herein stated, if, but only if, it, together with its
Affiliates and Associates, shall be the Beneficial Owner of 20% or more,
exclusive of those Common Shares held by it for or pursuant to the terms of any
such plan, of the Common Shares then outstanding. Notwithstanding the foregoing,
if the Board of Directors of the Company determines in good faith that a Person
who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise cause
such Person to be an "Acquiring Person" or (B) such Person was aware of the
extent of its Beneficial Ownership but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement), and without any
intention of changing or influencing control of the Company, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
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(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", or have beneficial ownership of, any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, including without limitation
securities with respect to which such Person or any of such Person's
Affiliates or Associates has "beneficial ownership" pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act;
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether or not in
writing (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,
other rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
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of, or to beneficially own or to have beneficial ownership of, any
securities pursuant to subparagraph (i), (ii) or (iii) of this paragraph
(c) solely because such securities are 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; or (B) the right to vote or dispose of (including
without limitation pursuant to any agreement, arrangement or understanding
(whether or not in writing)); provided, however, that a Person shall not be
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deemed the Beneficial Owner of, or to beneficially own or have beneficial
ownership of, any security pursuant to subparagraph (i), (ii) or (iii) of
this paragraph (c) solely because of the right to vote such security
pursuant to an agreement, arrangement or understanding if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person or any of such Person's
Affiliates or Associates in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and regulations 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) as being beneficially owned by such Person; or
(iii) 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 the final proviso to
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subparagraph (ii) of this paragraph (c)), or disposing of, any
securities of the Company.
Notwithstanding anything in these definitions of Beneficial Owner,
beneficially own or beneficial ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's beneficial ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to beneficially own
hereunder.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York or Colorado are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Denver, Colorado time, on such date; provided, however, that if such date is not
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a Business Day it shall mean 5:00 P.M., Denver, Colorado time, on the next
succeeding Business Day.
(f) "Common Shares", when used with reference to the Company, shall
mean shares of Common Stock, no par value (as such par value may be changed from
time to time), of the Company. "Common Shares", when used with reference to any
Person other than the Company, shall mean the class or series of capital stock
(or equity interest) with the greatest voting power of such other Person or if
such other Person is a Subsidiary of another Person, the Person or Persons that
ultimately control such first mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
(j) "Preferred Shares" shall mean shares of Series B Junior
Participating Preferred Stock, no par value (as such par value may be changed
from time to time), of the Company, having the rights and preferences set forth
in the form of Articles of Amendment to the Articles of Incorporation of the
Company attached to this Agreement as Exhibit A hereto.
(k) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
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(l) "Section 11(a)(ii) Event" shall mean an event described in the
first sentence of Section 11(a)(ii).
(l) "Section 13 Event" shall mean any event described in clauses (w),
(x), (y) or (z) of Section 13(a).
(m) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(n) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or other equity interests entitled to vote in the election of directors (or
Persons with comparable responsibilities if the entity has no directors) is
beneficially owned, directly or indirectly, by such Person or otherwise
controlled by such Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
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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 Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates.
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(a) Until the earlier of (i) the Close of Business on the 15th day
after the Shares Acquisition Date or (ii) the Close of Business on the 15th day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any wholly
owned Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) of, or of the first public announcement
of the intention of any Person (other than the Company, any wholly owned
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) to commence (which intention shall not have been
withdrawn within five business days (as defined in Rule 14d-1 of the General
Rules and Regulations under the Exchange Act) after such public announcement), a
tender or exchange offer the consummation of which would result in any Person
(other than the Company, any wholly owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan)
becoming the Beneficial Owner of 20% or more of the then outstanding Common
Shares (including any such date that is after
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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"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates when the context so requires) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more Right Certificates, in substantially the form of Exhibit B
hereto (the "Right Certificates"), evidencing one Right for each Common Share so
held, subject to adjustment pursuant to Section 11(i). In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Section 11(i), at the time Right Certificates are distributed, the Company may,
to the extent provided in Section 14(a), make the necessary and appropriate
rounding adjustments (as set forth in Section 14(a)) so that Right Certificates
are distributed representing only whole numbers of Rights and pay cash in lieu
of fractional Rights pursuant to Section 14(a). As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights") by first
class, postage-prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the Rights will be evidenced by such
certificates registered in the names of the holders thereof and the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier Redemption Date
or Final Expiration Date), the surrender for transfer of any certificate for
Common Shares (including without limitation the surrender for transfer of any
certificate for Common Shares outstanding as of the Record Date), with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates issued for Common Shares (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date and (i) prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date or (ii) upon the exercise or conversion, prior to the earlier of the
Redemption Date or the Final Expiration Date, of any option or other security
exercisable for or convertible into Common Shares, which option or other
security is outstanding on the
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Distribution Date, shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between ACT
Teleconferencing, Inc. (the "Company") and American Securities Transfer &
Trust, Inc., dated as of November 18, 1999 (the "Rights Agreement"), the
terms of which (including restrictions on the transfer of such Rights) are
hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Company. 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 Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written
request therefor from such holder. Under certain circumstances, as set
forth in the Rights Agreement, Rights that are or were beneficially owned
by an Acquiring Person or any Associate or Affiliate thereof (as such terms
are defined in the Rights Agreement) may become null and void.
With respect to such certificates containing any such legend, until the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, the registered holders of the Common
Shares shall also be the registered holders of the associated Rights and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and
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the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be in substantially 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 or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time
be listed, or to conform to usage or to reflect adjustments to the Rights made
pursuant to this Agreement. Subject to the provisions of Section 11 and Section
22 hereof, the initial Right Certificates, whenever distributed, shall entitle
the holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one-hundredth of a
Preferred Share set forth therein (the price per one-hundredth of a Preferred
Share being herein called the "Purchase Price"), but the amount and type of
securities purchasable upon
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the exercise of each Right and the Purchase Price shall be subject to adjustment
as provided herein.
Section 5. Countersignature and Registration.
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(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman, Chief Executive Officer, President, or any Vice President and
shall be attested by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed or whose facsimile signature shall
appear on 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 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 Certificate may be signed on
behalf of the Company by any person who, at the actual date of the signing of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or the office or offices designated as
the appropriate place for surrender of Rights 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 and certificate number of each of
the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
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Certificates; Lost, Stolen, Destroyed or Mutilated Right Certificates.
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(a) Subject to the provisions of 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 earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall
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surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office or offices of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall, subject to
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment by the registered holder 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. 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 duly completed and
executed 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) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
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Rights.
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(a) Subject to Section 11(a)(ii), 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
on the reverse side thereof duly completed and executed, to the Rights Agent at
the office or offices of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one one-hundredth of a Preferred
Share as to which Rights are exercised, at or prior to the earliest of (i) the
Close of Business on December 10, 2009 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $80, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
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(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly completed and executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof in cash, or by
certified check or bank cashiers' check or money order payable to the order of
the Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights under this Agreement
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional interests in shares
in accordance with Section 14 hereof, (iii) 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 (iv) when appropriate,
after receipt, promptly deliver such cash for fractional interests to or upon
the order of the registered holder of such Right Certificate.
(d) 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 delivered to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) duly completed and executed the form of election to purchase set forth on
the reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
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Right Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as
10
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Shares.
------------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in treasury, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) At such time, if any, as, and so long as, the Preferred Shares
issuable upon the exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company will prepare and file, as soon as practicable
following the Shares Acquisition Date, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the Rights and
the Company's securities purchasable upon exercise of the Rights on an
appropriate form, and use its best efforts to cause such registration statement
to (i) become effective as soon as practicable after such filing, and (ii)
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities or (B) the Final Expiration Date. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed 90 days after the date the registration statement
is filed, the exercisability of the Rights in order to permit the registration
statement to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such time
as a registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained or the exercise thereof is not permitted under applicable
law.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall,
11
at the time of delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price and any applicable transfer taxes), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Shares Record Date. Each person in whose name
----------------------------
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
-------- -------
which the Preferred Shares 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 Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate as such shall
not be entitled to any rights of a holder of Preferred 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.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
-------------------------------------------------------
or Number of Rights. The Purchase 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.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation,
merger or statutory share exchange in which the Company is the continuing,
surviving or acquiring corporation), except as otherwise provided in this
Section
12
11(a), the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable on
such date pursuant to the exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect (and any
applicable transfer taxes), 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 Shares 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. If an
event occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any Person
shall become an Acquiring Person (other than pursuant to any Section 13 Event
occurring on or after the Distribution Date or within 15 days prior thereto),
proper provision shall be made so that each holder of a Right, subject to
Section 11(a)(iii), shall thereafter have a right to receive, upon exercise
thereof by payment of the amount equal to the product of the number of one one-
hundredths of a Preferred Share which would otherwise be issuable upon exercise
of a Right and the then current Purchase Price in accordance with the terms of
this Agreement, in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is exercisable immediately prior to the occurrence of the Section
11(a)(ii) Event and (y) dividing that product by 50% of the then current per
share market price of the Company's Common Shares (determined pursuant to
Section 11(d)) on the date of such occurrence.
From and after the first occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, any Rights that are beneficially owned by any Acquiring Person
(or any Associate or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after the Acquiring
Person became an Acquiring Person shall become null and void without any further
action and no holder of such Rights shall thereafter have any rights to exercise
such Rights or any other rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights that would be void
pursuant to the preceding sentence; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate of such
an Acquiring Person or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person or any Associate or Affiliate of such Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be canceled.
The Company shall use all reasonable efforts to insure that the provisions of
this Section 11(a)(ii) are complied with, but shall have no liability to any
holder of a Right Certificate or other Person as a result of
13
its failure in good faith to make any determinations with respect to an
Acquiring Person or its Affiliates or Associates.
(iii) If, on the date of the occurrence of a Section 11(a)(ii) Event
(the "Adjustment Date"), the Company does not have sufficient unreserved issued
but not outstanding or authorized but unissued Common Shares available to permit
the exercise in full of all Rights that are exercisable on the Adjustment Date
for the number of Common Shares per Right provided for in Section 11(a)(ii),
then the Exercise Price (as defined below) and the number of Common Shares to be
delivered by the Company upon exercise of a Right shall be further adjusted as
provided in this subparagraph (iii).
(1) Definitions:
(A) The "Aggregate Market Value" is the product of (i) the number
of Available Shares and (ii) the current per share market price of the
Common Shares on the Adjustment Date, determined as provided in Section
11(d).
(B) The "Available Shares" are all unreserved Common Shares which
are issued but not outstanding or authorized but unissued immediately prior
to the Adjustment Date.
(C) The "Exercise Price" is the amount of the payment that must
be made by the holder of a Right in connection with the exercise of one
Right immediately prior to the Adjustment Date.
(D) The "Deficiency" is the amount by which (i) two times the
Exercise Price exceeds (ii) the quotient obtained by dividing the Aggregate
Market Value by the number of Rights remaining outstanding immediately
prior to the Adjustment Date (the "Remaining Rights") (which number shall
not include the Rights that are beneficially owned by any Acquiring Person
(or any Associate or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after the
Acquiring Person became an Acquiring Person that shall have become void
pursuant to Section 11(a)(ii) hereof).
(2) If the Deficiency is less than or equal to the Exercise Price,
then
(A) the number of Common Shares to be delivered by the Company
upon exercise of a Right shall be adjusted to equal the number of Available
Shares divided by the number of Remaining Rights; and
(B) the amount of cash required to be delivered by the holder of
a Right upon the exercise thereof shall be adjusted (the "New Exercise
Price") to equal the Exercise Price minus the Deficiency; provided,
--------
however, that in no event will the
-------
14
New Exercise Price be less than the aggregate par value of the Common
Shares required to be delivered upon the exercise of one Right pursuant to
subparagraph (2)(A) above.
(3) If the Deficiency is greater than the Exercise Price, then
(A) the number of Common Shares to be delivered by the Company
upon exercise of a Right shall be adjusted to equal the quotient obtained
by dividing the Exercise Price by the current per share market price of the
Common Shares on the Adjustment Date;
(B) the New Exercise Price shall equal the aggregate par value of
the Common Shares required to be delivered upon the exercise of one Right
pursuant to subparagraph 3(A) above; and
(C) In lieu of issuing Common Shares (in whole or in part upon
the exercise of Rights) the Company may issue, upon the exercise of Rights
at the New Exercise Price other equity securities of the Company
(including, without limitation, shares, or units or fractions of shares, of
preferred stock, which may include Preferred Shares) which the Board of
Directors of the Company has determined to have substantially the same
value, dividend rights and other rights as the Common Shares, provided,
that if the Board of Directors does not then have the authority to issue
preferred stock with voting rights, such preferred stock need not have
voting rights (such equity securities are herein called "common share
equivalents"). To the extent that such common share equivalents (or
fractions thereof) are substituted for Common Shares upon exercise of the
Rights following the occurrence of a Section 11(a)(ii) Event, they shall be
substituted on a pro rata basis with respect to all Rights (other than
Rights that are beneficially owned by any Acquiring Person (or any
Associate or Affiliate thereof) or were beneficially owned by any Acquiring
Person (or any Associate or Affiliate thereof) after the Acquiring Person
became an Acquiring Person that shall have become void pursuant to Section
11(a)(ii) hereof). Such common shares equivalents shall not be included in
Available Shares, and all of the Available Shares shall be reserved, as of
the Adjustment Date, for issuance, on a pro rata basis, upon exercise of
the Rights and may not be substituted for with common share equivalents
upon the exercise of any Right except to the extent that the number of
Common Shares required to be delivered under subparagraph (3)(A) upon the
exercise of such Right exceeds the quotient of the number of Available
Shares divided by the number of Remaining Rights.
(4) If, at the time any adjustment is required pursuant to this
Section 11(a)(iii), the Common Shares shall have no par value, then for the
purpose of this Section 11(a)(iii), the par value of the Common Shares shall be
deemed to be $.01 per share.
15
(5) In the event that there shall not be sufficient unreserved issued
but not outstanding or authorized but unissued Common Shares (or common share
equivalents the issuance of which is permitted under Section 11(a)(iii)(3)(C)),
to permit the exercise in full of the Rights in accordance with this
subparagraph (iii), the Company shall use its best efforts to cause the
authorization of sufficient additional Common Shares or common share equivalents
to permit such exercise and, if the Board of Directors of the Company shall
determine in good faith that it is likely that sufficient additional Common
Shares or common share equivalents could be authorized to permit such exercise,
the Company may suspend the exercisability of the Rights for a period not to
exceed 90 days (and not beyond the Final Expiration Date) in order to seek any
authorization of additional Common Shares or common share equivalents. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date, plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase, at such current per share market price, and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date, plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). 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 as
determined in good faith by the Board of Directors of the Company, whose
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. Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
16
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation or in a statutory share
exchange) of evidences of indebtedness or cash or non-cash assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current per share
market price of the Preferred Shares (as determined pursuant to Section 11(d))
on such record date, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose 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) of the portion of the evidences of indebtedness
or cash or non-cash assets so to be distributed on, or of such subscription
rights or warrants applicable to, one Preferred Share, and the denominator of
which shall be such current per share market price of the Preferred Shares.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such 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 current per share market price of the
-------
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
such Security or securities convertible into such Security (other than the
Rights) or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported on the
Nasdaq National Market, the Nasdaq SmallCap Market or any similar system then in
use, or, if on
17
any such date the Security is not quoted or reported by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company. Except as provided in Section 11(d)(ii) with respect to
Preferred Shares, if on any such day no market maker is making a market in the
Security, the fair value of such Security on such day as determined in good
faith by the Board of Directors of the Company (whose 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) shall be used in lieu of the closing
price for such day. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) If the Preferred Shares are not publicly held or listed or traded
in a manner described in Section 11(d)(i), then, notwithstanding anything to the
contrary provided in Section 11(d)(i), the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section 11(d)(i)
multiplied by one hundred (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof). If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, the "current per share market price" of the Preferred Shares
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose 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.
(e) Anything herein to the contrary notwithstanding, except as
provided in the third sentence of this Section 11(e), no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
-------- -------
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or one ten-
thousandth of any other share or security, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11, but for the first sentence of this Section 11(e), shall be made no
later than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, 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 shares contained in Section 11(a) through (c) inclusive and
18
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share (or other securities) purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to such adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one-one hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued on or after the Distribution Date, shall
be at least 10 days later than the date of the public announcement. If Right
Certificates have been issued on or after the Distribution Date, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 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
19
entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein, may bear,
at the option of the Company, the adjusted Purchase Price, and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a Preferred
Share and the number of one one-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
--------
however, that the Company 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.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors of the Company in its sole discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of any of the
Preferred Shares at less than the current per share market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) dividends on
Preferred Shares payable in Preferred Shares or (v) issuance of rights, options
or warrants referred to in paragraph (b) of this Section 11, hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(m) Anything in this Agreement or the Rights to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in any such case (x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before such event
and the denominator of which is the number of
20
Common Shares outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately after such event
and (y) each Common Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(m) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) and this Section 11(m), the adjustments
provided for in this Section 11(m) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
(n) If any adjustment in the Purchase Price pursuant to paragraph (b)
or (c) of this Section 11 would not be permitted by law or under the Company's
Articles of Incorporation, no such issuance of securities or distribution of
evidences of indebtedness or other assets or subscription rights or warrants, as
the case may be, that would require such an adjustment but for the limitations
established by law or the Company's Articles of Incorporation shall be made by
the Company.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Sections 11 and 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
Common Shares or the Preferred Shares a copy of such certificate and (c) if such
adjustment is made after the Distribution Date, mail a brief summary thereof to
each holder of record of a Right Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger, Statutory Share Exchange or Sale
-------------------------------------------------------
or Transfer of Assets or Earning Power.
--------------------------------------
(a) In the event, on or after the Distribution Date or within 15 days
prior thereto, directly or indirectly,
(w) the Company shall consolidate with, or merge with and
into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(x) any Person shall consolidate with the Company, or merge
with and into the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding Common
Shares of the Company shall be changed into or exchanged for stock or other
securities of any other Person (or the
21
Company) or money or any other property (except as a result of the exercise
of statutory dissenters' rights),
(y) the Company shall effect a statutory share exchange
with outstanding Common Shares of the Company being exchanged for stock or
other securities of any other Person, money or other property, or
(z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one 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 one or more of its wholly owned Subsidiaries),
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof by payment of the amount equal
to the product of the number of one one-hundredths of a Preferred Share which
would otherwise be issuable upon exercise of a Right and the then current
Purchase Price in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or adverse claims, as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is, immediately prior to the occurrence
of the Section 13 Event, exercisable and (y) dividing that product by 50% of the
then current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d)) on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such merger, consolidation, statutory share exchange,
sale or transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party; and (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Shares
to permit the exercise of all outstanding Rights) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its Common Shares thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (w),
(x) or (y) of the first sentence of Section 13(a), the Person (including,
without limitation, the Company as successor thereto or as the surviving
corporation) that is the issuer of any securities into which Common Shares
of the Company are converted in such merger, consolidation or exchange, or
if no securities are
22
so issued, the Person that is the other party to such merger, consolidation
or exchange; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the Common Shares of such
-------- -------
Person are not at such time and have not been continuously over the preceding 12
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person, the Common Shares of which
are and have been so registered, "Principal Party" shall refer to such other
Person, and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of unreserved issued but not
outstanding or authorized but unissued Common Shares to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of
the Rights, on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (1) the date as
of which the Rights are no longer exercisable for such securities or (2)
the Final Expiration Date;
(ii) take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(iii) 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.
23
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish or eliminate the benefits intended to be
afforded by the Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there may be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on the Nasdaq National Market
or the Nasdaq SmallCap Market or any similar system then in use or, if on any
such date the Rights are not so quoted or reported, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used in lieu of the closing price for such day.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share, or, if a Right shall then be exercisable for a fraction other
than one one-hundredth of a Preferred Share, integral multiples of that
fraction) upon exercise of the Rights or to issue certificates which evidence
fractions of Preferred Shares (other than fractions that are integral multiples
of one one-hundredth of a Preferred Share, or if a Right shall be then
exercisable for a fraction other than one one-hundredth of a
24
Preferred Share, integral multiples of that fraction). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share or, if a
Right shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction, 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 current market
value of one Preferred Share. For purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise or if the
closing price is not determinable pursuant to the second sentence of Section
11(d)(i) hereof, the current market value of a Preferred Share shall be
determined pursuant to Section 11(d)(ii).
(c) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares (except as provided above) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
----------------
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), 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 Shares), may, in such holder's own behalf and
for such 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, such holder's right to exercise the Rights evidenced by such Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
25
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) 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 purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) the Company may issue Rights after the Effective Date but prior
to the Distribution Date, and in certain instances after the Distribution Date,
as provided in this Agreement; and
(e) notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Rights Agent and the Board of Directors shall not
have any liability to any holder of a Right or other Person as a result of the
inability of the Company or the Rights Agent to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares 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.
26
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
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 (including the costs and expenses of
defending against any claim of liability), incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
-----
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, 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 Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
27
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates
(or, prior to the Distribution Date, the Common Shares certificates), by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of the "current per share market price") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman, the Chief Executive Officer, the
President or any Vice President of the Company and delivered to the Rights
Agent; and such certificate shall be full 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.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due 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
28
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman, the Chief Executive Officer, the President or any Vice
President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for delay in acting while waiting for those
instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company or its Subsidiaries may be interested, or contract with or
lend money to the Company or its Subsidiaries or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company or its Subsidiaries or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights or
powers 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.
29
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the form of assignment or form of
election to purchase, as the case may be, has either not been duly completed and
executed or indicates an affirmative response to enumerated clause 1 and/or 2 on
the reverse side of the applicable Right Certificate, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and, if such notice is mailed after the Distribution Date, to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and, if such notice is mailed after the
Distribution Date, to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation or other
entity organized and doing business under the laws of the United States or of
the State of Colorado or New York (or of any other state of the United States so
long as such corporation is authorized to do business in the State of Colorado
or New York), in good standing, having an office in the State of Colorado or New
York that is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50 million 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 Shares and Preferred Shares, and, if such
notice is filed after the Distribution Date, mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any
30
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
----------------------------------
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
----------
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) such time as a Person becomes an Acquiring
Person or (y) the Close of Business on the Final Expiration Date, redeem all but
not less than all of the then outstanding Rights at a redemption price of $.001
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement (such redemption
price being hereinafter referred to as the "Redemption Price"). The Redemption
Price shall be payable in cash by the Company. The redemption of the Rights by
the Board of Directors of the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company in
its sole discretion may establish. Except for the obligation of the Company to
pay the Redemption Price, the Board of Directors and the Company shall not have
any liability to any Person as a result of the redemption of Rights pursuant to
the terms of this Section 23.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, 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 of the Company 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 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 Shares; provided, however,
-------- -------
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner herein
provided shall be deemed given whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. 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 except as specifically set forth in this Section 23 or in Section 24
or other than in connection with the purchase of Common Shares prior to the
Distribution Date.
31
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at any
time after any person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
shall have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares with each Right to be exchanged for such number of Common
Shares as shall equal the result obtained by dividing (x) the Exercise Price (as
defined in Section 11(a)(iii)) by (y) the current per share market price of the
Common Shares (determined pursuant to Section 11(d)) on the date the Rights
first become exercisable for Common Shares pursuant to Section 11(a)(ii) (such
number of shares being hereinafter referred to as the "Exchange Ratio"). The
Exchange Ratio shall be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction affecting the Common Shares that occurs after
the date the Rights first become exercisable for Common Shares pursuant to
Section 11(a)(ii). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any wholly owned Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (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 Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
--------
however, that the failure to give, or any defect in, such notice shall not
-------
affect the validity of such exchange. The Company promptly shall 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. 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 Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which shall have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient unreserved Common
Shares issued but not outstanding or authorized but not issued to permit an
exchange of Rights as contemplated in accordance with this Section 24, the
Company, at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof, or common share
equivalents, as such term is defined in Section 11(a)(iii)(3)(C)
32
hereof), for Common Shares exchangeable for Rights, at the initial rate of one
one-hundredth of a Preferred Share (or equivalent preferred share) or one common
share equivalent for each Common Share, as appropriately adjusted to reflect
stock splits, stock dividends or similar transactions affecting the Common
Shares that occur after the date of this Agreement.
(d) In the event that there shall not be sufficient unreserved Common
Shares, Preferred Shares, equivalent preferred shares, as such term is defined
in Section 11(b), or common share equivalents, as such term is defined in
Section 11(a)(iii)(3)(C), issued but not outstanding or authorized but unissued
to permit the exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorized
additional Common Shares or Preferred Shares, equivalent preferred shares or
common share equivalents for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, the Company may pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24. The Board of Directors and the Company
shall not have any liability to any Person as a result of the exchange of Rights
pursuant to the terms of this Section.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), or (ii)
to offer to the holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or (iv) to
effect any consolidation or merger into or with any other Person, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or 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 or Persons (other than the
Company and/or any of its wholly owned Subsidiaries), or (v) to effect any
statutory share exchange with outstanding Common Shares of the Company being
exchanged for stock or other securities of any other corporation or money or
other property, or (vi) to effect the liquidation, dissolution or winding up of
the Company, or (vi) to declare or pay any dividend on the Common Shares payable
in Common Shares or to
33
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise), then, in each such case, the Company shall give
to each holder of a Right Certificate, to the extent feasible and 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 or distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, exchange, sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the Common
Shares and/or Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, 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(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, or delivered by hand or express courier
service or faxed, addressed (until another address is filed in writing with the
Rights Agent) as follows:
ACT Teleconferencing, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage-prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Securities Transfer & Trust, Inc.
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx X-0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Vice President Operations
34
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage-prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may and the
--------------------------
Rights Agent shall, if so directed by the Company, from time to time supplement
or amend this Agreement without the approval of any holders of Common Shares or
Right Certificates in order (i) to extend the Final Expiration Date, (ii) to
cure any ambiguity, or to correct or supplement any provision contained in this
Agreement which may be defective or inconsistent with any other provisions in
this Agreement, (iii) prior to the Distribution Date, to otherwise change or
supplement any provision in this Agreement in any manner which the Company may
deem necessary or desirable or (iv) following the Distribution Date, to
otherwise change or supplement any provision in this Agreement 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 Right
Certificates evidencing Rights that shall have become null and void pursuant to
Section 11(a)(ii)). Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) hereto
from 20% to not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding Common Shares then known by the Company to be
beneficially owned by any Person (other than (1) the Company, (2) any wholly
owned Subsidiary of the Company, (3) any employee benefit plan of the Company or
any Subsidiary of the Company, or (4) any entity holding Common Shares for or
pursuant to the terms of any plan described in clause (3) of this sentence) or
(ii) 10%.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement.
--------------------------
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Shares).
(b) 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 the Company or
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to
35
interpret this Agreement and to make all determinations deemed necessary or
advisable for the administration of this Agreement. All such acts, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent and the holders of the Rights and all other parties
and (y) not subject the Board of Directors to any liability to the holders of
the Rights or any other party.
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Colorado and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
ACT TELECONFERENCING, INC.
By /s/ Xxxxxx X. Xxx Xxxxxxxx
------------------------------------------
Its Chairman
----------------------------------------
AMERICAN SECURITIES TRANSFER & TRUST, INC.
By /s/ Xxxxx Xxxxxxxx
-----------------------------------------
Its Vice President/ Trust Officer
----------------------------------------
36
EXHIBIT A
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION OF
ACT TELECONFERENCING, INC.
SETTING FORTH THE DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES B JUNIOR PARTICIPATING PREFERRED SHARES
I, Xxxxxx X. Xxx Xxxxxxxx, the Chairman of ACT Teleconferencing, Inc.,
a corporation organized and existing under the Business Corporation Act of the
State of Colorado, in accordance with the provisions of Section 0-000-000
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Articles of Incorporation of the corporation, as amended, the
Board of Directors on November 18, 1999, duly adopted the following resolution
creating a series of 100,000 Preferred Shares, no par value, designated as
Series B Junior Participating Preferred Shares:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this corporation in accordance with the provisions of its
Restated Articles of Incorporation, as amended, a series of Preferred Stock of
this corporation be, and it hereby is, created, and that the designation and
amount thereof and the relative rights and preferences of the shares of such
series, are as follows:
1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series B Junior Participating Preferred Shares" (the "Series B
Preferred Shares"), and the number of shares constituting such series shall be
One Hundred Thousand (100,000). The number of shares constituting such series
may, unless prohibited by the Articles of Incorporation or by applicable law of
the State of Colorado, be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of Series B
--------
Preferred Shares to a number less than the number of shares then issued and
outstanding plus the number of shares issuable upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the corporation convertible into Series B Preferred Shares.
2. Dividends and Distributions.
---------------------------
(i) The holders of Series B Preferred Shares, in preference to
the holders of Common Shares 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 last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
A-1
Exhibit A To Exhibit 1
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a Series B Preferred Share, or fraction thereof, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, one hundred (100) times
the aggregate per share amount of all cash dividends, and one hundred (100)
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or otherwise),
declared on the Common Shares since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any Series B Preferred Share, or fraction thereof.
In the event the corporation shall at any time after December 10, 1999 declare
or pay any dividend on Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in each such case the amount to which holders of Series B Preferred Shares
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(ii) The corporation shall declare a dividend or distribution on
the Series B Preferred Shares as provided in subparagraph (i) of this paragraph
2 simultaneously with its declaration of a dividend or distribution on the
Common Shares (other than a dividend payable in Common Shares or a subdivision
of the outstanding Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares 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 B Preferred
Shares shall nevertheless be payable, out of funds legally available for such
purpose, on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding Series B Preferred Shares from the Quarterly Dividend Payment Date
immediately preceding the date of issue of such Series B Preferred Shares,
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 Series B Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the Series B Preferred Shares in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares outstanding at that time. The Board of Directors may fix a record date
for the determination of holders of Series B Preferred Shares entitled to
receive payment of a dividend or distribution declared
A-2
thereon, which record date shall be not more than sixty (60) days prior to the
date fixed for the payment thereof.
3. Certain Restrictions.
--------------------
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Shares as provided in paragraph
2 hereof are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on Series B Preferred Shares
outstanding shall have been paid in full, the corporation shall not:
(a) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Shares;
(b) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Shares, except dividends paid ratably on the Series B Preferred Shares
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;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Shares,
provided that the corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of stock of the
corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series B Preferred Shares; or
(d) redeem or purchase or otherwise acquire for
consideration any Series B Preferred Shares, or any shares of stock ranking on a
parity with the Series B Preferred Shares, 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.
(ii) 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 subparagraph (i) of
this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
4. Reacquired Shares. Any Series B Preferred Shares purchased or
-----------------
otherwise acquired by the corporation in any manner whatsoever shall be retired
and canceled
A-3
promptly after such acquisition. All such shares shall upon their cancellation
become authorized but unissued Preferred Shares and may be reissued as part of a
new series of Preferred Stock by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein or in the Articles of Incorporation, or as otherwise required by law.
5. Liquidation, Dissolution or Winding Up. Upon any liquidation,
--------------------------------------
dissolution or winding up of the corporation (voluntary or otherwise), no
distribution shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Shares unless, prior thereto, the holders of Series B
Preferred Shares shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
one hundred (100) times the aggregate amount to be distributed per share to
holders of Common Shares, or (b) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Shares, except distributions made ratably on the
Series B Preferred Shares 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 December 10, 1999 declare or pay any dividend on the Common
Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a greater or lesser number of Common Shares, then in each such
case the aggregate amount to which holders of Series B Preferred Shares were
entitled immediately prior to such event under clause (a)(ii) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
6. Consolidation, Merger, Exchange, etc. In case the corporation
-------------------------------------
shall enter into any consolidation, merger, combination, statutory share
exchange or other transaction in which the Common Shares are exchanged for or
changed into other stock or securities, money and/or any other property, then in
any such case the Series B Preferred Shares shall at the same time be similarly
exchanged or changed into an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to one hundred (100) times the aggregate
amount of stock, securities, money and/or any other property (payable in kind),
as the case may be, into which or for which each Common Share is changed or
exchanged. In the event the corporation shall at any time after December 10,
1999 declare or pay any dividend on Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of
Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Series B Preferred Shares
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares
A-4
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
7. No Redemption. The Series B Preferred Shares shall not be
-------------
redeemable.
8. Rank. The Series B Preferred Shares shall rank junior in terms
----
of dividend and liquidation, dissolution and winding up rights to any series of
the corporation's Preferred Stock authorized prior to the date hereof and all
other series of the corporation's Preferred Stock hereafter authorized that
specifically provide that they shall rank senior to the Series B Preferred
Shares.
9. Fractional Shares. Series B Preferred Shares may be issued in
-----------------
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series B Preferred
Shares.
IN WITNESS WHEREOF, the corporation has caused these Articles of
Amendment to the Articles of Incorporation to be executed in its name by its
duly authorized officer on this 18th day of November, 1999.
/s/ Xxxxxx X. Xxx Xxxxxxxx
----------------------------------------------
Xxxxxx X. Xxx Xxxxxxxx, Chairman
----------------------------------------------
A-5
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- ______ _________ Rights
NOT EXERCISABLE AFTER DECEMBER 10, 2009 OR SUCH EARLIER DATE AS THE
BOARD OF DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT (SUBJECT
TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
ACT TELECONFERENCING, INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of November 18, 1999 (the "Rights Agreement") between ACT
Teleconferencing, Inc., a Colorado corporation (the "Company"), and American
Securities Transfer & Trust, Inc. (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (Denver, Colorado time) on December 10,
2009 at the office or offices of the Rights Agent designated for such purpose,
or of its successor as Rights Agent, one one-hundredth of a fully paid,
nonassessable Series B Junior Participating Preferred Share, no par value (the
"Preferred Shares"), of the Company, at a purchase price of $80 per one one-
hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
completed and executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are, except for adjustments required pursuant to the Rights
Agreement, the number and Purchase Price as of December 10, 1999, based on the
Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share 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.
B-1
Exhibit B To Exhibit 1
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 which
contains 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 voiding of
the Rights under certain circumstances specified in the Rights Agreement).
Copies of the Rights Agreement are on file with the Secretary at the principal
executive office of the Company and will be mailed without charge by the Company
or the Rights Agent to the holder of this certificate promptly following receipt
by the Company or the Rights Agent of a written request therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), any Rights evidenced by this Right Certificate
that are beneficially owned by an Acquiring Person or an Associate or Affiliate
of such Acquiring Person (as such terms are defined in the Rights Agreement) or
were beneficially owned by any Acquiring Person or an Associate or Affiliate of
such Acquiring Person after the Acquiring Person becomes an Acquiring Person
shall be null and void from and after the occurrence of such Section 11(a)(ii)
Event.
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 Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may, but are not required to, be redeemed by
the Company at a redemption price of $.001 per Right, subject to adjustment as
provided in the Rights Agreement, payable in cash and (ii) may, but are not
required to, be exchanged by the Company in whole or in part for Common Shares
or other shares of capital stock of the Company. The Board of Directors of the
Company and the Company shall not have any liability to any person as a result
of the redemption or exchange of the Rights pursuant to the provisions of the
Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one one-hundredth of a Preferred Share or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction, which may, at the election
of the Company, be evidenced by depositary receipts), if in lieu thereof a cash
payment is made, as provided in the Rights Agreement.
B-2
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated: _______________
ACT TELECONFERENCING, INC.
By:________________________________
Its:______________________________
ATTEST:
By:________________________________
Its:______________________________
Countersigned:
**[____________________________]
By:____________________________
Authorized Manual or
Facsimile Signature
B-3
[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 ___________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ________________
________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-4
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
[_] are
or
[_] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
[_] did
or
[_] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
_______________________________________
Signature
NOTICE
The signature of the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
TO: ACT TELECONFERENCING, INC.
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
Dated: _____________________
________________________________________
Signature
B-6
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-7
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
[_] are
or
[_] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
[_] did
or
[_] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
________________________________________
Signature
NOTICE
The signature of the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
OF
ACT TELECONFERENCING, INC.
On November 18, 1999, the Board of Directors of ACT Teleconferencing,
Inc. (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding Common Share, no par value (the "Common
Shares"), of the Company. The dividend is payable on December 10, 1999 (the
"Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a Series B Junior Participating Preferred Share, no par
value (the "Preferred Shares"), of the Company at a price of $80 per one one-
hundredth of a Preferred Share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement"), dated as of November 18, 1999, between the Company and
American Securities Transfer & Trust, Inc., as Rights Agent (the "Rights
Agent").
Initially, the Rights will attach to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares and a Distribution
Date for the Rights will occur upon the earlier of:
(i) the close of business on the fifteenth day following a
public announcement that a person or group of affiliated or associated persons
has become an "Acquiring Person" (i.e., has become, subject to certain
exceptions, the beneficial owner of 20% or more of the outstanding Common
Shares), or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming, subject to certain exceptions, the beneficial owner
of 20% or more of the outstanding Common Shares (or such later date as may be
determined by the Board of Directors of the Company prior to a person or group
of affiliated or associated persons becoming an Acquiring Person).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Share
certificates and will be transferred with and only with the Common Shares,
C-1
Exhibit C to Exhibit 1
(ii) new Common Share certificates issued after the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any Common Share certificate,
even without such notation or a copy of this Summary of Rights attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on December 10, 2009, unless
extended or earlier redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares of
certain rights, options or warrants to subscribe for or purchase Preferred
Shares or convertible securities at less than the then current market price of
the Preferred Shares, or
(iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those described in clause (ii) hereof).
The number of Preferred Shares issuable upon the exercise of a Right is also
subject to adjustment in the event of a dividend on Common Shares payable in
Common Shares, or a subdivision, combination or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in
C-2
cash is made based on the closing price (pro-rated for the fraction) of the
Preferred Shares on the last trading date prior to the date of exercise.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise thereof at the then current exercise price of the Right
that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.
In the event that, on or after the Distribution Date or within 15 days
prior thereto, the Company is acquired in certain mergers or other business
combination transactions or 50% or more of the assets or earning power of the
Company and its subsidiaries (taken as a whole) are sold on or after the
Distribution Date or within 15 days prior to the Distribution Date in one or a
series of related transactions, each holder of a Right (other than Rights which
have become void under the terms of the Rights Agreement) will thereafter have
the right to receive, upon exercise thereof at the then current exercise price
of the Right, that number of common shares of the acquiring company (or, in
certain cases, one of its affiliates) having a market value of two times the
exercise price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Board of Directors of the Company
may exchange all or part of the Rights (other than Rights which have become void
under the terms of the Rights Agreement) for Common Shares or equivalent
securities at an exchange ratio per Right equal to the result obtained by
dividing the exercise price of a Right by the current per share market price of
the Common Shares, subject to adjustment.
At any time prior to the time that a person or group of affiliated or
associated persons has become an Acquiring Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right, subject to adjustment (the "Redemption Price"), payable in cash. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. The Board of Directors and the Company shall not have any liability
to any person as a result of the redemption or exchange of the Rights pursuant
to the provisions of the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of
the Company, subject to certain limitations after the Distribution Date, without
the consent of the
C-3
holders of the Rights, including an amendment prior to the date a person or
group of affiliated or associated persons becomes an Acquiring Person to lower
the 20% threshold for exercisability of the Rights to not less than the greater
of (i) the sum of .001% and the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any person or group
of affiliated or associated persons (subject to certain exceptions) or (ii) 10%.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
________________, 1999. A copy of the Rights Agreement is available free of
charge from the Company by contacting the Secretary at ACT Teleconferencing,
Inc., 0000 Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000-0000. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
C-4
