EXHIBIT 4.3.7
RIGHTS AGREEMENT
between
FOAMEX INTERNATIONAL INC.
and
MELLON INVESTOR SERVICES LLC,
as Rights Agent
Dated: As of August 5, 2004
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definitions....................................................................1
Section 2. Appointment of Rights Agent............................................................5
Section 3. Issue of Right Certificates............................................................6
Section 4. Form of Right Certificates.............................................................8
Section 5. Countersignature and Registration......................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates...........................................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................10
Section 8. Cancellation and Destruction of Right Certificates....................................12
Section 9. Reservation and Availability of Series A Preferred Shares;
Registration..........................................................................13
Section 10. Series A Preferred Shares Record Date.................................................14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights......................................................................14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............................22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.................................................................................22
Section 14. Fractional Rights and Fractional Shares...............................................24
Section 15. Rights of Action......................................................................25
Section 16. Agreement of Right Holders............................................................26
Section 17. Right Certificate Holder Not Deemed a Stockholder.....................................27
Section 18. Concerning the Rights Agent...........................................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.............................28
Section 20. Duties of Rights Agent................................................................29
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Section Page
------- ----
Section 21. Change of Rights Agent................................................................31
Section 22. Issuance of New Right Certificates....................................................32
Section 23. Redemption............................................................................32
Section 24. Exchange..............................................................................33
Section 25. Notice of Certain Events..............................................................34
Section 26. Notices...............................................................................35
Section 27. Supplements and Amendments............................................................35
Section 28. Successors............................................................................36
Section 29. Determinations and Actions by the Board of Directors..................................36
Section 30. Benefits of this Agreement............................................................36
Section 31. Severability..........................................................................37
Section 32. Governing Law.........................................................................37
Section 33. Consequential Damages.................................................................37
Section 34. Counterparts..........................................................................37
Section 35. Descriptive Headings..................................................................37
EXHIBITS
--------
A. Form of Certificate of Designations of Series A Preferred Stock
B. Form of Right Certificate
C. Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
----------------
Rights Agreement (the "Agreement"), dated as of August 5, 2004, between
Foamex International Inc., a Delaware corporation (the "Company"), and Mellon
Investor Services LLC, a New Jersey limited liability company, as Rights Agent
(the "Rights Agent", which term shall include any successor Rights Agent
hereunder).
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding at the close of business on
August 16, 2004 (the "Record Date"), each Right representing the right to
purchase, upon the terms and subject to the conditions set forth herein, one
one-thousandth (1/1000) of a share of Series A Preferred Stock, par value $1.00
per share, of the Company ("Series A Preferred Stock"), having the rights and
preferences set forth in the Form of Certificate of Designations of Preferred
Stock with respect to the Series A Preferred Stock, a copy of which is attached
hereto as Exhibit A. The Board of Directors of the Company has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding (whether originally issued or delivered from
the Company's treasury) after the Record Date and on or prior to the earliest of
the Separation Date, the Redemption Date and the Final Expiration Date (each as
hereinafter defined).
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 following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who, together with all
Affiliates and Associates of such Person, shall hereafter become the Beneficial
Owner of 20% or more of the Common Shares then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) 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 or for
purposes of funding or providing Common Shares to any such plan or (iv) any
Scotia Stockholder (as hereinafter defined) so long as such Scotia Stockholder
is not the Beneficial Owner of 25% or more of the Common Shares then
outstanding. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as a result of an acquisition of Common Shares by the Company, which
acquisition, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
(or, in the case of a Scotia Stockholder, 25% or more) of the Common Shares then
outstanding; provided, however, that if a Person shall become the beneficial
owner of 20% or more (or, in the case of a Scotia Stockholder, 25% or more) of
the Common Shares then outstanding by reason of such share purchases by the
Company and shall, after such share purchases, become the Beneficial Owner of
any additional Common Shares of the
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Company, then such Person shall be deemed to be an "Acquiring Person".
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 provision, has become such
inadvertently, 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, 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 (the
"Rules") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the Record Date.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, now or hereafter owns or has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed to be the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
and provided further, that a Person shall not be deemed to be the Beneficial
Owner of, or to beneficially own, securities that such Person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) upon the exercise of (a) employee stock options now or hereafter (but
prior to the Separation Date) issued by the Company, or (b) conversion rights
conferred in any class or series of Preferred Stock of the Company issued prior
to the Separation Date if the resolutions of the Board providing for the
issuance of such class or series of Preferred Stock shall specifically refer to
this Rights Agreement and provide that the right to acquire securities upon the
exercise of conversion rights so conferred shall not be deemed to constitute
beneficial ownership of such securities;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote (except as hereinafter
provided) or dispose of, or of which any of them, directly or indirectly, has
"beneficial ownership" (as determined pursuant to Rule 13d-3 of the Rules, as in
effect on the Record Date) (including, except as hereinafter provided, pursuant
to any agreement, arrangement or understanding, whether or not in writing);
provided, however, that a Person shall not be deemed to be the Beneficial Owner
of, or to beneficially own, any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in
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accordance with, the applicable provisions of the Rules and is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report);
(iii) that 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), for the purpose of, or with respect
to, acquiring, holding, voting (except as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting securities
of the Company; and
(iv) that are, pursuant to the foregoing subparagraphs of this
paragraph (c), or otherwise, deemed to be owned by a voting trust, voting agent,
recipient of a proxy that is not immediately revocable (a "Non-revocable Proxy")
or any other Person to whom such Person (the "Grantor Person") has contributed,
conveyed, delegated, given, granted, tendered, transferred or otherwise assigned
or conferred (collectively, "given") some or all of the voting rights
attributable to the Common Shares of which the Grantor Person (alone or in
conjunction with any other Person) is also deemed to be a Beneficial Owner.
Solely for purposes of this Agreement, the Grantor Person shall be deemed to be
the Beneficial Owner of all Common Shares that such voting trust, voting Agent,
proxy holder or other Person has the right, by Non-revocable Proxy, agreement,
assignment, tender, grant or otherwise, to exercise some or all of the voting
rights attributable thereto, whether or not the Grantor Person shall have
contributed or given voting rights that constitute all or less (even
substantially less) than all of the voting rights held by the voting trust,
voting Agent, proxy holder or other Person to whom or to which the Grantor
Person has given some or all of the voting rights attributable to Common Shares
otherwise beneficially owned by the Grantor Person; provided, however, that
nothing in this paragraph (c) shall cause a person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of or to "beneficially
own" any securities acquired through such person's participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
(d) "Board" means the Board of Directors of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in New York, New Jersey or Pennsylvania
are authorized or obligated by law or executive order to close.
(f) "close of business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean
shares of Common Stock, par value $0.01 per share, of the Company. "Common
Shares" or "common shares," when used with reference to any
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Person other than the Company, shall mean the capital stock of such Person with
the greatest voting power or the equity securities or other equity interest
having power to control or direct the management of such Person.
(h) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity and shall include any
successor (by merger or otherwise) of such entity.
(i) "Section 11(a)(ii) Event" shall mean an event described in Section
11(a)(ii).
(j) "Section 13(a) Event" shall mean any event described in clause (x)
or (y) or (z) of Section 13(a).
(k) "Series A Preferred Shares" shall mean shares of Series A
Preferred Stock, par value $1.00 a share, of the Company, including any
authorized fraction of a Series A Preferred Shares, unless the context otherwise
requires.
(l) "Scotia Stockholder" shall mean (i) The Bank of Nova Scotia or any
of its Affiliates and Associates and (ii) any Person that is the direct
transferee of any of the Common Shares beneficially owned as of the date hereof
by any of the Persons identified in clause (i) above if such transferee would
otherwise become an Acquiring Person as a result of such transfer.
(m) "Shares Acquisition Date" shall mean the first date of public
announcement (including, without limitation, a report filed pursuant to Section
13(d) or 14(d) under the Exchange Act) by the Company or an Acquiring Person
indicating that an Acquiring Person has become such.
(n) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting securities or voting interests is owned, directly or indirectly, by such
Person, or otherwise controlled by such Person.
(o) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13(a) Event.
The following additional terms have the meanings indicated in the specified
Sections of this Agreement set forth below:
(i) "Act" -- Section 9(c).
(ii) "Adjustment Shares" -- Section 11(a)(ii).
(iii) "Common Share equivalent" -- Section 11(a)(iii).
(iv) "Current Value" -- Section 11(a)(iii).
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(v) "equivalent shares" -- Section 11(b).
(vi) "Exchange Act" -- Section 1(b).
(vii) "Final Expiration Date" -- Section 7(a).
(viii) "Grantor Person" -- Section 1(c)(iv).
(ix) "Non-Revocable Proxy" -- Section 1(c)(iv)
(x) "Principal Party" -- Section 13(b).
(xi) "Purchase Price" -- Sections 4(a), 11(a)(ii) and 13(a).
(xii) "Record Date" -- Preamble.
(xiii) "Redemption Date" -- Section 7(a).
(xiv) "Redemption Price" -- Section 23(a).
(xv) "Rules" -- Section 1(b).
(xvi) "Separation Date" -- Section 3(a).
(xvii) "Series A Preferred Stock" -- Preamble.
(xviii) "Spread" -- Section 11(a)(iii).
(xix) "Substitution Period" -- Section 11(a)(iii).
(xx) "Summary of Rights" -- Section 3(b).
(xxi) "Trading Day" -- Section 11(d)(i).
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as rights agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment and agrees to act as Rights Agent under this
Agreement. The Company may from time to time appoint such co-rights agents as it
may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
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Section 3. Issue of Right Certificates.
---------------------------
(a) Until the earlier of (i) the close of business on the tenth
Business Day following the Shares Acquisition Date or (ii) the close of business
on the fifteenth Business Day (or such later date as may be determined by action
of the Board prior to the time as any Person becomes an Acquiring Person) after
the date on which a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first commenced within the meaning of Rule 14d-2(a) of the Rules, if
upon consummation thereof, such Person would be the Beneficial Owner of 20% or
more of the Common Shares then outstanding (the earlier of (i) and (ii) being
herein referred to as the "Separation 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) 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 Separation Date, the Company must promptly notify
the Rights Agent thereof in writing and request the transfer agent to provide
the Rights Agent with the names and addresses of all record holders of Common
Shares. As soon as practicable after the Rights Agent receives such written
notice and stockholders list, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and
Rights Agent will, if requested and if provided with all necessary information,
send,) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Separation Date, at the address
of such holder shown on the records of the Company or the transfer agent or
registrar for the Common Shares, one or more Right Certificates, in
substantially the form of Exhibit B hereto, evidencing one Right for each Common
Share so held. In the event that an adjustment in the number of Rights per
Common Share has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Right Certificates representing only whole numbers of Rights are
distributed and cash may be paid in lieu of any fractional Rights. As of and
after the Separation Date, the Rights will be evidenced solely by such Right
Certificates. The Company shall promptly notify the Rights Agent in writing upon
the occurrence of the Separation Date and, if such notification is given orally,
the Company shall confirm same in writing on or prior to the Business Day next
following. Until such notice is received by the Rights Agent, the Rights Agent
may presume conclusively for all purposes that the Separation Date has not
occurred.
(b) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close
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of business on the Record Date, at the address of such holder shown on the
records of the Company or the transfer agent or registrar for the Common Shares.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Separation Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof, together with a
copy of the Summary of Rights attached thereto, and the registered holders of
the Common Shares shall also be the registered holders of the associated Rights.
Until the earliest of the Separation Date, the Redemption Date or the Final
Expiration Date, the surrender for transfer of any certificate for Common Shares
outstanding on 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 for Common Shares issued after the Record Date but
prior to the earliest of the Separation Date, the Redemption Date or the Final
Expiration 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 FOAMEX INTERNATIONAL INC. AND THE RIGHTS AGENT
THEREUNDER, AS IT MAY FROM TIME TO TIME BE AMENDED OR
SUPPLEMENTED IN ACCORDANCE WITH ITS TERMS (THE "RIGHTS
AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED
HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF FOAMEX INTERNATIONAL INC.
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. FOAMEX INTERNATIONAL INC. WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT,
AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE,
PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER
CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
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PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.
Section 4. Form of Right Certificates.
--------------------------
(a) The Right Certificates (and the forms of election to purchase
Series A Preferred Shares, exercise notice and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate, which do not
affect the rights, duties or responsibilities of the Rights Agent 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 on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Right Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of one one-thousandth of a
share of Series A Preferred Stock as shall be set forth therein at the price per
one one-thousandth of a Series A Preferred Share set forth therein (the
"Purchase Price"), but the amount and type of the securities purchasable (or
other consideration to be made available) upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board has determined is part of a plan, arrangement or understanding
that has as a primary purpose or effect avoidance of Section 7(e) hereof, and
any Right Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS
9
AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board or its President, Chief Executive Officer or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal, attested by the Secretary, the Treasurer or
any Assistant Secretary or Assistant Treasurer of the Company, or shall bear a
facsimile thereof. The Right Certificates shall not be valid for any purpose
unless countersigned by the Rights Agent, whether manually or by facsimile
signature. In case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by 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 execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Separation Date and receipt by the Rights Agent of
the written notice and list of record holders of Rights and all other relevant
information referred to in Section 3(a), the Rights Agent will keep or cause to
be kept, at its office designated pursuant to Section 26 hereof or agency
designated for such purpose, books for registration and transfer of the Right
Certificates issued or to be 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, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
------------------------------------------------------------
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the close of business on the Separation 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 may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered
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holder to purchase a like number of Series A Preferred Shares (or, following a
Section 11(a)(ii) Event or Section 13(a) Event, Common Shares, other securities
or property, as the case may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purpose. The Rights Certificates are transferable only on the registry books of
the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall 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 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. The Rights Agent shall not be
required to process the transaction until it receives evidence in writing that
all taxes and governmental charges have been paid by the Company.
(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 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 Rights.
-------------------------------------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Separation Date upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-thousandth of a Series A Preferred Share as to which the
Rights are exercised, and an amount equal to any applicable tax or charge
required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof, in cash, or by certified check or cashier's check payable to
the order of the Company, at or prior to the close of business on the earliest
of
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(i) August 4, 2014 (the "Final Expiration Date"), (ii) the date on 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-thousandth of a Series A
Preferred Share pursuant to the exercise of a Right shall initially be $20.00,
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.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Series A Preferred Shares (or other
shares, securities or property, as the case may be) to be purchased and an
amount equal to any applicable tax or governmental charge required to be paid by
the holder of such Right Certificate in accordance with Section 9 hereof, in
cash, or by certified check or cashier's check payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the Series A
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the number of Series A Preferred Shares (or
fractions thereof) 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 Series A Preferred Shares issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one
one-thousandth of a Series A Preferred Share as are to be purchased (in which
case certificates for the Series A 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) if
and when necessary to comply with this Agreement, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional 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) if and when necessary
to comply with this Agreement, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate. In the event
that the Company is obligated to issue other securities (including Common
Shares) or assets pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities or assets are available for
distribution by the Rights Agent, if and when appropriate.
(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 to the registered holder of such Right Certificate or to his
duly authorized assigns subject to the provisions of Section 6 and Section 14
hereof.
12
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of a Triggering Event, any Rights beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee from an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such or
(iii) a transferee of an Acquiring Person (or such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and any holder of such Rights shall thereupon have no rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. The Company shall
give the Rights Agent written notice of the identity of any such Acquiring
Person, Associate or Affiliate, or the nominee of any of the foregoing, and the
Rights Agent may rely on such notice in carrying out its duties under this
Agreement and shall be deemed not to have knowledge of the identity of any such
Acquiring Person, Associate or Affiliate, or the nominee of any of the foregoing
unless and until it shall have received such notice.
(f) 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) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
--------------------------------------------------
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as 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, or shall, at
the
13
written request of the Company, destroy such canceled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Series A Preferred Shares;
Registration.
---------------------------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Series A Preferred Shares
the number of Series A Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights. Prior to the occurrence of a
Triggering Event, the Company shall not be obliged to cause to be reserved and
kept available out of its authorized and unissued Common Shares or shares of
preferred stock (other than Series A Preferred Shares), any such Common Shares
or any shares of preferred stock (other than the Series A Preferred Shares) to
permit exercise of outstanding Rights.
(b) If the Series A Preferred Shares issuable upon the exercise of
Rights are 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) If then required by applicable law, the Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date after
the occurrence of a Triggering Event as to which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement, or as soon as is required by law following the
Separation Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing and (iii) cause such registration statement to 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 and (B) the Final Expiration Date. If then required by applicable
law, the Company will also take such action as may be appropriate under the
securities or "blue sky" laws of the various states. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement. Upon any such suspension, the
Company shall promptly notify the Rights Agent thereof and issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended and, at such time as the suspension is no longer in effect, shall
promptly notify the Rights Agent thereof and issue a further public announcement
thereof. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained.
14
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Series A Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company covenants and agrees that it will pay when due and
payable any and all taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any Series A Preferred
Shares (or Common Shares and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any tax
or charge 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
for the Series A Preferred Shares (or Common Shares and/or other securities, as
the case may be) 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 for Series A Preferred Shares (or Common Shares and/or
other securities, as the case may be) upon the exercise of any Rights until any
such tax or charge shall have been paid (any such tax or charge 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 or charge is
due.
Section 10. Series A Preferred Shares Record Date.
-------------------------------------
Each Person in whose name any certificate for Series A Preferred
Shares (or Common Shares and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Series A Preferred Shares (or Common Shares and/or other
securities, as the case may be) 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 taxes
and charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Series A Preferred Shares (or Common Shares
and/or other securities, as the case may be) 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 Series A Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled (in such holder's capacity as such) to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote any shares, to
receive dividends or other distributions with respect to any shares or to
exercise any preemptive rights with respect to any shares, 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.
--------------------------------------------------------------
15
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 that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Series A Preferred Shares
payable in Series A Preferred Shares, (B) subdivide the outstanding Series A
Preferred Shares, (C) combine the outstanding Series A Preferred Shares into a
smaller number of Series A Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Series A Preferred Shares (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, 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, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock that, if such
Right had been exercised immediately prior to such date and at a time when the
Series A 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; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.
(ii) Subject to Section 24 hereof, in the event that there is a
Shares Acquisition Date and a Separation Date, then proper provision shall be
made so that each holder of a Right, except as provided below and in Section
7(e) hereof, shall thereafter have a right to receive, upon exercise thereof at
the Purchase Price in effect as of the date of the Section 11(a)(ii) Event, in
lieu of Series A Preferred Shares, and subject to the provisions of Section
11(a)(iii) below, such number of Common Shares as shall equal the result
obtained by (x) multiplying such Purchase Price by the number of one
one-thousandth of a Series A Preferred Share for which a Right is exercisable as
of the date of the Section 11(a)(ii) Event and (y) dividing that product (which,
following the first occurrence of such event, shall be referred to as the
"Purchase Price" for all purposes of this Agreement) by 50% of the current per
share market price of the Common Shares (determined pursuant to Section 11(d)
hereof), but not less than the par value thereof, on the date of the first
occurrence of such Section 11(a)(ii) Event (such number of shares, the
"Adjustment Shares").
(iii) In the event that (x) the total of the Common Shares that
are issued but not outstanding and authorized but unissued (excluding Common
Shares reserved for issuance pursuant to the specific terms of any indenture,
option plan or other agreement) is not sufficient to permit the exercise in full
of the Rights in accordance with Section 11(a)(ii) hereof or (y) the total
number of Common Shares available for exercise of the Rights in accordance with
Section 11(a)(ii) hereof is sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii) but the Board determines that such
exercise of the Rights will not afford
16
adequate protection to the stockholders of the Company and that stockholders
should be given an option to acquire a substitute for the Adjustment Shares, and
subject to such limitations as are necessary to prevent a default under any
agreement for money borrowed to which the Company is a party and to comply with
applicable law, then the Board shall: (A) determine the excess of (1) the value,
based upon the current per share market price of the Common Shares (determined
pursuant to Section 11(d) hereof), of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread") and (B) with respect to each Right, make adequate
provision to substitute for, or provide an election to acquire in lieu of, the
Adjustment Shares, upon payment of the applicable Purchase Price (which term
shall include any reduced Purchase Price) any combination of the following
having an aggregate value equal to the Current Value (such aggregate value to be
determined by the Board based upon the advice of a nationally recognized
investment banking firm selected by the Board): (1) a reduction in the Purchase
Price, (2) Common Shares and/or other equity securities of the Company
(including, without limitation, shares or units of shares of any Series of
preferred stock that the Board has deemed to have the same value as Common
Shares (such shares or units of share of preferred stock hereinafter referred to
as "Common Share equivalents")) and/or (3) debt securities of the Company and/or
cash and other assets; provided, however, that if this Section 11(a)(iii) is
applicable and the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within 30 days following the first occurrence
of a Triggering Event, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and then, if necessary, cash,
which securities and/or cash in the aggregate are equal to the Spread. If the
Board shall determine in good faith that it is likely that sufficient additional
Common Shares could be authorized for issuance upon exercise in full of the
Rights, the 30 day period set forth above may be extended to the extent
necessary, but not more than 90 days following the first occurrence of a
Triggering Event, in order that the Company may seek stockholder approval for
the authorization of such additional shares (such period, as it may be extended,
the "Substitution Period"). If the Company determines that some action needs to
be taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution Period
in order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall promptly notify the Rights Agent thereof and issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended
and, at such time as the suspension is no longer in effect, shall promptly
notify the Rights Agent thereof and issue a public announcement thereof. For
purposes of this Section 11(a)(iii), the value of the Common Shares shall be the
current per share market price (as determined pursuant to Section 11(d) hereof)
of the Common Shares on the date of the first occurrence of a Triggering Event.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Series A Preferred Shares
entitling them
17
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Series A Preferred Shares (or shares having the same
rights, privileges and preferences as the Series A Preferred Shares ("equivalent
shares")) or securities convertible into Series A Preferred Shares or equivalent
shares at a price per Series A Preferred Share or equivalent share (or having a
conversion price per share, if a security convertible into Series A Preferred
Shares or equivalent shares) less than the then current per share market price
of the Series A Preferred Shares (as defined in 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 Series
A Preferred Shares outstanding on such record date plus the number of Series A
Preferred Shares that the aggregate offering price of the total number of Series
A Preferred Shares and/or equivalent 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 market price and the denominator of
which shall be the number of Series A Preferred Shares outstanding on such
record date plus the number of additional Series A Preferred Shares and/or
equivalent 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, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the holders of
the Rights. Series A 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 adjustments shall be made successively whenever such a record date is
fixed; and in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the distribution
to all holders of the Series A Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of any debt securities, cash or assets
(other than a regular quarterly cash dividend or a dividend payable in Series A
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 then current per share market price of the Series A Preferred
Shares (as defined in Section 11(d) hereof) on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and binding on the
holders of Rights) of the portion of the assets or debt securities so to be
distributed or of such subscription rights or warrants applicable to one Series
A Preferred Share and the denominator of which shall be such current per share
market price of the Series A Preferred Shares (as determined pursuant to Section
11(d) hereof). 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.
18
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of the Common Shares on any date shall be deemed to be
the lesser of (x) the average of the daily closing prices per Common Share for
the 30 consecutive Trading Days immediately prior to such date or (y) the
average of the daily closing prices per Common Share for the 30 consecutive
Trading Days immediately following such date; provided, however, that in the
event that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common Shares
of a dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares (other than the
Rights), or any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of 20 Trading Days after the ex-dividend
date for such dividend or distribution, then, and in each such case, the current
market price shall be appropriately adjusted to reflect the current market price
per Common Share equivalent. 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 on the principal national securities exchange, if any, on
which the Common Shares are then listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Shares selected in good faith by the Board. The term "Trading Day" shall mean a
day on which the principal national securities exchange or NASDAQ on which the
Common Shares are listed or traded or are admitted to trading is open for the
transaction of business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange or NASDAQ, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Series A Preferred Shares shall be determined in
the same manner as set forth above for Common Shares in clause (i) of this
Section 11(d). If the current per share market price of the Series A Preferred
Shares cannot be determined in the manner provided above, the "current per share
market price" of the Series A Preferred Shares shall be conclusively deemed to
be the current per share market price of the Common Shares (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by 1,000. If neither the Common
Shares nor the Series A Preferred Shares are publicly held or so listed or
traded, "current per share market price" shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and binding on the holders of Rights.
(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 that by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account
19
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or the nearest one one-hundredth of a Common Share or
other share or one one-ten thousandth of a Series A Preferred Share, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
provided for in this Section 11 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) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any property, other securities (other than shares of capital
stock of the Company) or shares of capital stock of the Company other than
Series A Preferred Shares, thereafter the amount of such property, other
securities (other than shares of capital stock of the Company) and the number of
such other shares of capital stock so receivable upon exercise of any Right (as
well as any consideration to be paid therefor) 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 Series A Preferred Shares (and the
Purchase Price) contained in this Section 11, and the provisions of Sections 7,
9, 10 and 13 with respect to the Series A Preferred Shares shall apply on like
terms to any such property, other securities and other shares of capital stock.
(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 Series A Preferred
Shares 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) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandth of a Series A Preferred Share (calculated to the nearest one
one-ten thousandth of a Series A Preferred Share) obtained by (i) multiplying
(x) the number of one one-thousandth of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Series A Preferred Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-thousandth of a
Series 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 the 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
20
Price in effect immediately after adjustment of the Purchase Price. The Company
shall promptly notify the Rights Agent and make a public announcement of its
election to adjust the number of Rights and shall provide written notice of such
election to the Rights Agent, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, and executed by the Company, and countersigned by the Rights
Agent in the manner provided for herein 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 Series A Preferred Shares issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-thousandth of a share and the number of
shares that were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the then stated value, if any, of
the Series A Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Series A Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer (with prompt written notice thereof to the
Rights Agent) until the occurrence of such event the issuing to the holder of
any Right exercised after such record date of the Series A Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Series A 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 promptly notify the Rights Agent of such election and 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. The Company shall provide the Rights Agent with
written notice of any adjustment in the Purchase Price.
21
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Series A
Preferred Shares, (ii) issuance wholly for cash of any of the Series A Preferred
Shares at less than the current market price, (iii) issuance wholly for cash of
Series A Preferred Shares or securities that by their terms are convertible into
or exchangeable for Series A Preferred Shares, (iv) dividends on Series A
Preferred Shares payable in Series A Preferred Shares or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Series A Preferred Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, and shall not
permit any Subsidiary, at any time after the Separation Date, to (i) consolidate
with, (ii) merge with or into or (iii) sell or transfer, in one or more
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, if at the time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the Separation Date,
it will not, except as permitted by Section 23, Section 24, Section 27 or
Section 31 hereof, take (or permit any Subsidiary to take) any action that at
the time it is reasonably foreseeable will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights; provided, however,
that the issuance of additional Rights pursuant hereto, including by action of
the Board under Section 22 hereof, shall not be deemed to violate this Section
11(o).
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Record Date (i) declare a
dividend on the outstanding Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, the number of Rights associated with
each Common Share then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter associated
(whether before or after the Separation Date) with each Common Share following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each Common Share immediately prior to such event by a
fraction the numerator of which shall be the total number of Common Shares
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of Common Shares outstanding immediately
following the occurrence of such event. For purposes of this Section 11(p), any
Common Shares issued after the Separation Date that were not issued together
with a Right (pursuant to the Preamble hereto or by action of the Board pursuant
to Section 22 hereof) shall not be counted as outstanding.
22
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made or any event affecting the Rights or
their exercisability (including, without limitation, an event which causes
Rights to become null and void) occurs as provided in Sections 11 or 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event, and a brief, reasonably detailed statement
of the facts, computations and methodology of accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares or the Series A Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate (or, if
prior to the Separation Date, to each holder of a certificate representing
Common Shares) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment or
statement therein contained and shall have no duty or liability with respect to
and shall not be deemed to have knowledge of any such adjustment or any such
event unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
---------------------------------------------------------------
(a) In the event that, following a Shares Acquisition Date and a
Separation Date, directly or indirectly, (x) 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, (y) any
Person shall consolidate with, or merge with or 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 Common Shares shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in a single transaction or a
series of related transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company), then, and in each such case, proper provision shall be made so that
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price in effect as of the date of the Section 13(a) Event, and in lieu of Series
A Preferred Shares, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party, not
subject to any rights of first refusal, redemption or repurchase, as shall be
equal to the result obtained by (1) multiplying such Purchase Price by the
number of one one-thousandth of a Series A Preferred Share for which a Right is
exercisable as of the date of the Section 13(a) Event and dividing that product
(which, following the Section 13(a) Event, shall thereafter be referred to as
the "Purchase Price" for all purposes of this Agreement) by (2) 50% of the
current per share market price (determined pursuant to Section 11(d) hereof) per
Common Share (or other securities or property as provided for herein) of such
23
Principal Party on the date of consummation of such consolidation, merger, sale
or transfer, (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale 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, (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) 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, and (v) the provisions of Sections 11(a)(ii) and 11(a)(iii) hereof
shall thereafter be of no effect following the occurrence of a Section 13(a)
Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
clause (y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which Common Shares of the Company are converted in such
merger or consolidation, and if no securities are so issued, the Person that is
the other party to such merger or consolidation; 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 either 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 such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares, which have not been issued or reserved for issuance,
to permit the exercise in full of the Rights in accordance with this Section 13
and 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 consolidation,
merger or sale of assets mentioned in paragraph (a) of this Section 13, 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
24
on an appropriate form, and will 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 Final Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply in all
respects with the requirements for registration on Form 10 under the Exchange
Act. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that one of
the transactions described in Section 13(a) hereof shall occur at any time after
the occurrence of a transaction described in Section 11(a)(ii) hereof, the
Rights that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Separation Date as provided in Section 11(p) hereof, or to
distribute Right Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall 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 on the principal national securities exchange, if any, on
which the Rights are then listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date the Rights are not publicly held or so listed or traded, the
current market value of a whole Right shall mean the fair value of a whole Right
as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and binding on the holders of Rights.
(b) The Company shall not be required to issue fractions of Series A
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Series A Preferred Share) upon exercise of the Rights or to
distribute certificates that evidence fractional Series A Preferred Shares
(other than fractions that are integral multiples of one one-thousandth of a
Series A Preferred Share). Fractions of
25
Series A Preferred Shares in integral multiples of one one-thousandth of a
Series A Preferred Share 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 Series A
Preferred Shares. In lieu of fractional Series A Preferred Shares that are not
integral multiples of one one-thousandth of a Series A Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Series A Preferred Share. For
purposes of this Section 14(b), the current market value of a Series A Preferred
Share shall be the closing price of a Series A Preferred Share (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates that evidence fractional Common Shares. In lieu of
fractional Common Shares, 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 Common
Share. For purposes of this Section 14(c), the current market value of one
Common Share shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right, by the acceptance of the Rights, expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as otherwise set forth herein.
(e) The Rights Agent shall have no duty or obligation with respect to
this Section 14 unless and until it has received specific instructions (and
sufficient cash, if required) from the Company with respect to its duties and
obligations under such Sections. Whenever a payment for fractions of Rights or
fractions of Series A Preferred Shares is to be made by the Rights Agent, the
Company shall (i) promptly prepare and deliver to the Rights Agent a certificate
setting forth in reasonable detail the facts related to such payments and the
prices and/or formulas utilized in calculating such payments, and (ii) provide
sufficient monies to the Rights Agent in the form of fully collected funds to
make such payments. The Rights Agent shall be fully protected in relying upon
such a certificate and shall have no duty with respect to, and shall not be
deemed to have knowledge of any payment for fractions of Rights or fractions of
Series A Preferred Shares under any Section of this Agreement relating to the
payment of fractions of Rights or fractions of Series A Preferred Shares unless
and until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action.
----------------
26
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 Separation Date, the registered holders of any certificate representing
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Separation Date, of any other certificate representing Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Separation Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders.
--------------------------
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Separation Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Separation Date, the Right Certificates are transferable
(subject to Section 7(e)) only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with appropriate
forms and certificates fully executed; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Separation 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 Certificates or the associated Common Shares
certificates 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) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling (whether interlocutory or final)
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
27
obligation; provided, however, that the Company must use its best efforts to
have any such order, decree, judgment or ruling lifted or otherwise overturned
as soon as reasonably practicable.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
-------------------------------------------------
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 Series A
Preferred Shares, or any other securities of the Company, that 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
stockholder of the Company, including, without limitation, any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or other distributions
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, damage, judgment,
ruling (interlocutory or final), fine, penalty, claim, demand, settlement (but
with respect to any settlement only with the Company's prior consent, which
shall not be unreasonably withheld), cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(which gross negligence, bad faith or willful misconduct must be determined by a
final non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including,
without limitation the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided herein shall survive the
termination of this Agreement and the termination and expiration of the Rights.
The costs and expenses incurred in enforcing this right of indemnification shall
be paid by the Company. Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the possibility
of such loss or damage. Any liability of the Rights Agent under this Rights
Agreement will be limited to the amount of fees paid by the Company to the
Rights Agent hereunder. The provisions of this Section 18 and
28
Section 20 below shall survive the termination of this Agreement, the exercise
or expiration of the Rights and the resignation, replacement or removal of the
Rights Agent.
(b) The Rights Agent shall be fully indemnified against, shall be
protected from, and shall incur no liability or expense (including without
limitation attorneys' fees and expenses) for, or in respect of, any action
taken, suffered or omitted by it in connection with, the acceptance and
administration of this Agreement and the exercise and performance of its duties
hereunder, in reliance upon any Rights Certificate or certificate for the Series
A 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, instruction, 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. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained. The Rights Agent shall not be deemed to have
any duty or notice unless and until the Company has provided the Rights Agent
with written notice.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
stockholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such Person 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.
(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
29
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, and only the duties
and obligations, expressly imposed by this Agreement (and no implied duties or
obligations) upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or an employee of the Rights Agent), and the written
advice or opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability
for, or in respect of, any action taken, suffered, or omitted by it in
accordance with such written advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
determination of the current per share market price of any security) be proved
or established by the Company prior to taking, suffering or omitting to take any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for, or in respect of, for any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct
(which gross negligence, bad faith or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of
the possibility of such loss or damage.
(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.
30
(e) The Rights Agent shall not have any liability for or be under any
responsibility or liability 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 adjustment
required under the provisions of Section 11 or Section 13 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Series A Preferred Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Series A Preferred
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 of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
such instructions shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for, or in respect of, any action
taken, suffered or omitted by it in good faith in accordance with instructions
of any such officer or for any delay in acting while waiting for those
instructions. The Rights Agent may conclusively rely on the most recent
instructions given by any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any stockholder, Affiliate, member, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
31
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent or any such stockholder, Affiliate, member, director or employee from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself (through
its directors, officers and employees) or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect
or misconduct, absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof (which gross negligence, bad faith or
willful misconduct must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2 on such
certificate attached to the form of assignment or form of election to purchase,
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 Series A
Preferred Shares known to the Rights Agent by registered or certified mail. In
such event, the Company shall give written notice of such resignation 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 Series A Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, 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
32
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, that is subject to supervision or examination by
federal or state authority, or (b) an Affiliate of a Person 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 Series A Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price per share 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. In
addition, the Company may, if deemed necessary or appropriate by the Board,
issue Right Certificates in connection with the issuance or sale of Common
Shares following the Separation Date.
Section 23. Redemption.
----------
(a) The Board may, at its option, at any time prior to the earlier of
(A) the Separation Date or (B) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price").
(b) In the case of a redemption permitted under Section 23(a) hereof,
immediately upon the action of the Board ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent and without any
further
33
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. Within 10 days after the action of the Board ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders (with prompt written notice thereof to the Rights Agent) of the then
outstanding Rights (in case of notice to holders) 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 Separation Date, on the registry books of the
Transfer Agent for the Common Shares; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
redemption. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
--------
(a) The Board may, at its option, at any time after the right of the
Company to redeem the Rights has expired, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board shall not
be empowered to effect such exchange at any time after any Person (other than
the Company, any Subsidiary or the Company, any employee benefit plan of the
Company or any such Subsidiary, or Person organized, appointed or established by
the Company 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 ordering the exchange of
any Rights pursuant to Section 24(a) hereof and without any further action and
without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of the holders 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 written notice
to the Rights Agent and public notice of any such exchange; provided, however,
that 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 the Rights Agent and 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 that 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 that
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than
34
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Series A Preferred Shares for Common Shares at the rate
of one one-thousandth of a Series A Preferred Share for each Right.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Series A Preferred
Shares (except as hereinafter provided) or fractional Common Shares, but if the
exchange is for Series A Preferred Shares, the Company shall be obligated to
issue fractional shares so long as any fraction of a Series A Preferred Share so
to be issued is at least equal to one one-thousandth of a Series A Preferred
Share. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share. For the purposes of
this Section 24(d), (i) the current market value of a whole Common Share shall
be the current per share market price determined in accordance with Section
11(d)(i) hereof as of the day immediately following the day of the public
announcement by the Company that an exchange is to be effected pursuant to this
Section 24 and (ii) the current market value of a Series A Preferred Share or
fraction of a Series A Preferred Share shall be the current market value on such
day of a Series A Preferred Share (or fraction of a Series A Preferred Share) as
determined in accordance with Section 11(d)(ii) hereof.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the
Separation Date, (i) to pay any dividend payable in stock of any class to the
holders of Series A Preferred Shares or to make any other distribution to the
holders of Series A Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Series A Preferred Shares rights
or warrants to subscribe for or to purchase any additional Series A Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of Series A Preferred Shares
(other than a reclassification involving only the subdivision of outstanding
Series A Preferred Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and 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, 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
35
Series A Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 20 days prior to the record date for determining holders of the Series
A Preferred Shares for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Shares
and/or Series A Preferred Shares, whichever shall be the earlier.
(b) In case of the occurrence of a Section 11(a)(ii) Event, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
the Rights Agent and each holder of a Right Certificate, to the extent feasible
and 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), and (ii) all references in the
preceding paragraph to Series A Preferred Shares shall be deemed thereafter to
refer to Common Shares and/or, if appropriate, other securities.
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, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
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:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000-0000
Attention: General Counsel
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.
--------------------------
36
The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing signed
by the Company and, if such supplement or amendment affects the rights, duties
or obligations of the Rights Agent, the Rights Agent; provided, however, that
(i) the Rights Agent cannot be required to change or amend its duties and
obligations under this Agreement and (ii) from and after such time as there is a
Shares Acquisition Date and a Separation Date, this Agreement shall not be
amended in any manner which would adversely affect the interests of the holders
of Rights. Upon the delivery of a certificate from an appropriate officer of the
Company and, if requested by the Rights Agent, an opinion of counsel, which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
Agent may, but shall not be obligated to, enter into any supplement or amendment
that affects the Rights Agent's own rights, duties, obligations or immunities
under this Agreement. Prior to the Separation Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of Common
Shares.
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. Determinations and Actions by the Board of Directors.
----------------------------------------------------
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time and any determination of the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner shall be made in accordance with the provisions of Rule
13d-3(d)(1)(i) of the Rules as in effect as of the Record Date. The Board shall
have the exclusive power and authority to administer the provisions of this
Agreement and to exercise all rights and powers specifically granted to the
Board or the Company, or as may be necessary or advisable in the administration
of this Agreement. All such actions, calculations, interpretations and
determinations below, all omissions with respect to the foregoing) that are done
or made by the Board, in good faith, shall be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties
and shall not subject the Board to any liability to the holders of the Rights.
The Rights Agent is entitled always to assume the Company's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
Section 30. Benefits of this Agreement.
--------------------------
37
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Separation Date, the 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
Separation Date, the Common Shares).
Section 31. Severability.
------------
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
close of business on the tenth day following the date of such determination by
the Board.
Section 32. 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 New York, and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely within such
State; and any provision of this Agreement and each such Right Certificate
relating to the internal corporate governance or other affairs of the Company
shall be governed by and construed in accordance with the laws of the State of
New York.
Section 33. Consequential Damages.
---------------------
Neither party to this Agreement shall be liable to the other party or any
other Person for consequential damages.
Section 34. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original and all
such counterparts shall together constitute but one and the same instrument.
Section 35. Descriptive Headings.
--------------------
38
Descriptive headings of the several Sections of this Agreement are inserted
for convenience of reference only and shall not control or affect the meaning or
construction of any of the provisions hereof.
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
MELLON INVESTOR SERVICES LLC, as Rights Agent
By: /s/ Xxxxxx Xxxx
----------------------------------------------
Name: Xxxxxx Xxxx
Title: Senior Client Service Manager
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A PREFERRED STOCK
of
FOAMEX INTERNATIONAL INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-----------------------
Foamex International Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation (hereinafter called the "Board of
Directors" or the "Board") as required by Section 151 of the General Corporation
Law at a meeting duly called and held on August 5, 2004:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors in accordance with the provisions of the Restated Certificate of
Incorporation of the Corporation, the Board of Directors hereby creates a series
of Preferred Stock, par value $1.00 per share, of the Corporation, and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof (in addition to the provisions set forth in
the Restated Certificate of Incorporation which are applicable to the Preferred
Stock of all classes and series) as follows:
Section 1 Designation and Amount.
----------------------
The shares of such series shall be designated as "Series A Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting the
Series A Preferred Stock shall be 250,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights and
warrants and upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2 Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $0.01 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when and as declared by the Board of
Directors, out of any funds legally available for the purpose, cash dividends in
an amount per share (rounded to the nearest cent), subject to the provisions for
adjustment set forth in Section 8, equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend or distribution payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the first issuance of any share or fraction
of a share of Series A Preferred Stock.
(b) The Corporation shall declare a dividend or distribution on the
shares of Series A Preferred Stock as provided in paragraph (a) of this Section
2 immediately after it declares such dividend or distribution on the Common
Stock (other than a dividend or distribution payable in shares of Common Stock)
and shall pay such dividend or distribution on the shares of Series A Preferred
Stock immediately before paying any dividend or distribution on the Common Stock
(other than a dividend or distribution payable in shares of Common Stock).
(c) The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof and in the case of
dividends and distributions declared pursuant to paragraph (b) of this Section
2, shall be the same date as the record date for the determination of holders of
Common Stock entitled to receive payment of a dividend or distribution
triggering declaration of the dividend or distribution declared pursuant to
paragraph (b) of this Section 2.
(d) Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time payable on such
shares shall be allocated pro rata on a share by share basis among all such
shares at the time outstanding.
Section 3 Voting Rights.
-------------
The holders of shares of Series A Preferred Stock shall have the following
voting rights:
A-2
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4 Certain Restrictions.
--------------------
(a) Whenever dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, 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 A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
A-3
(iii) 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 A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5 Reacquired Shares.
-----------------
Any shares of Series A Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Restated Certificate of
Incorporation, or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6 Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) Upon any liquidation, dissolution or winding up of the Corporation
(which shall not include any transaction covered by Section 7), no distribution
shall be made to the holders of shares of stock ranking junior (upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained
A-4
by dividing (i) the Series A Liquidation Preference by (ii) 1,000, subject to
the provision for adjustment set forth in Section 8 (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Preferred Stock and Common Stock, respectively, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to one with respect to such Series A
Preferred Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Preferred Stock, then all such
available assets shall be distributed ratably to the holders of the Series A
Preferred Stock and the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then any such remaining assets shall be distributed ratably to the holders of
Common Stock.
Section 7 Consolidation, Merger, etc.
--------------------------
In case the Corporation shall enter into any consolidation, merger,
combination, exchange or other transaction in which the shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment set forth in Section 8, equal to
1000 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
Section 8 Effect of Common Stock Splits, etc.
-----------------------------------
In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under Sections 2, 6 or 7 shall be
adjusted by multiplying each such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 9 No Redemption.
-------------
A-5
Except as otherwise set forth herein, the shares of Series A Preferred
Stock shall not be redeemable.
Section 10 Rank.
----
The Series A Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, (i) junior to all other series or
classes of the Corporation's Preferred Stock (including without limitation, the
Corporation's Series B Preferred Stock, par value $1.00 per share), and (ii)
senior to the Common Stock.
Section 11 Amendment.
---------
The Restated Certificate of Incorporation of the Corporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-6
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its [Title] and attested by its Secretary this 5th day of
August, 2004.
FOAMEX INTERNATIONAL INC.
By:
-----------------------------
Name:
Title:
Attest:
--------------------------------------
Name:
Title: Secretary
A-7
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER AUGUST 4, 2014 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT (AS HEREINAFTER DEFINED)) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE AGREEMENT.]1
Right Certificate
FOAMEX INTERNATIONAL 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 August 5, 2004 (the "Rights Agreement"), between FOAMEX
INTERNATIONAL INC., a Delaware corporation (the "Company"), and MELLON INVESTOR
SERVICES LLC, a New Jersey limited liability company (the "Rights Agent"), to
purchase from the Company at any time after the Separation Date (as such term is
defined in the Rights Agreement) and prior to the close of business (5:00 PM New
York time) on August 4, 2014, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, nonassessable share of Series A Preferred Stock,
par value $1.00 per share ("Series A Share") of the Company, at a purchase price
of $20.00 per one one-thousandth of a share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. The number of rights
evidenced by this Right Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and
1 The portion of the legend in brackets shall be inserted if applicable and
shall replace the preceding sentence.
Purchase Price as of August 5, 2004 based on the Series A Shares as constituted
at such date.
Upon the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (a) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(b) a transferee of any such Acquiring Person, Associate or Affiliate or (c)
under certain circumstances specified in the Rights Agreement, a transferee of a
person or entity who, after such transfer, became an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such rights from and after the occurrence of any such Triggering
Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Series A Shares or other securities or other property that 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.
The Board may, at its option, at any time after the right of the Company to
redeem the Rights has expired, exchange all or part of the then outstanding and
exercisable Rights (other than those held by the Acquiring Person and Affiliates
and Associates of the Acquiring Person) for Common Shares (as such term is
defined in the Rights Agreement) at an exchange ratio of one Common Share per
Right, as adjusted. Immediately upon the action of the Board ordering an
exchange of the Rights, the Rights affected by such order will no longer be
exercisable and thereafter the only right of the holders of such Rights will be
to receive the Common Shares issuable by the Company in exchange for such
Rights.
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights for not more than 90 days at the election of the Company and under
certain circumstances specified in such Rights Agreement. Copies of the Rights
Agreement are on file at the office of the Rights Agent and are also available
upon written request to the Company.
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 Series A Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If the Rights evidenced by this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender
B-2
hereof another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed at a redemption price of $0.001 per Right at
any time prior to the earlier of (A) the Separation Date (as such term is
defined in the Rights Agreement) or (B) the Final Expiration Date (as such term
is defined in the Rights Agreement). Immediately upon the action of the Board
ordering redemption of the Rights, the Rights will no longer be exercisable;
and, thereafter the only right of the holders of the Rights evidenced hereby
will be to receive the Redemption Price.
The terms of the Rights evidenced by this Certificate may be supplemented
or amended without the approval of any holder of the Rights (or the Common
Shares) as set forth in the Rights Agreement.
No fractional Series A Shares will be issued upon the exercise of any Right
or Rights evidenced hereby (other than fractions that are integral multiples of
one one-thousandth of a Series A Share, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Series A Shares or
of any other securities of the Company that may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-3
WITNESS the facsimile signatures of the proper officers of the Company.
Dated: ___________, 20__
FOAMEX INTERNATIONAL INC.
By:
------------------------------
Name:
Title:
Attest:
------------------------------
Name:
Title: Secretary
(Corporate Seal)
Countersigned
MELLON INVESTOR SERVICES LLC, as Rights Agent
By:
------------------------------------
Name:
Title:
B-4
[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: _______________, 20__
_____________________________
Signature
Signature Guaranteed:
B-5
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _____________, 20__
_____________________________
Signature
NOTICE
The signature(s) to the foregoing Assignment and Certificate must
correspond to the name(s) as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: FOAMEX INTERNATIONAL INC.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Series A Shares (or
fractions thereof) issuable upon the exercise of such Rights (or such other
securities of the Company or of any other entity that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of:
Please insert social security
or other identifying number: ________________________________________________
(Please print name and address)
____________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
B-7
Please insert social security
or other identifying number: __________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: __________________, 20__
_____________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) to the best knowledge of the undersigned, it [ ] did [ ] not acquire
the Rights evidenced by this Right Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ________________, 20__
_____________________________
Signature
B-8
NOTICE
The signature(s) to the foregoing Election to Purchase and Certificate must
correspond to the name(s) as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-9
EXHIBIT C
FOAMEX INTERNATIONAL INC.
Summary of Rights to Purchase Preferred Shares
On August 5, 2004, the Board of Directors of our Company, Foamex
International Inc., a Delaware corporation, declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of common stock, par
value $0.01 per share. The dividend is payable on August 23, 2004 to the
stockholders of record on August 16, 2004 (the "Record Date"). The Rights are
subject to the terms of a Rights Agreement, dated as of August 5, 2004, between
our Company and Mellon Investor Services LLC, as the Rights Agent.
Our Board has entered into the Rights Agreement to protect stockholders
from coercive or otherwise unfair takeover tactics, such as someone taking
control without paying an appropriate control premium, and to protect the
Company against the creation of a "change of control" in our debt instruments
other than as part of a transaction, approved by our Board, for the benefit of
the Company and its Stockholders. In general terms, the Rights Agreement works
by imposing a significant penalty upon any person or group that acquires 20% or
more of our outstanding common stock without the approval of our Board. The
Rights Agreement will not interfere with any merger or other business
combination approved by our Board.
For those interested in the specific terms of the Rights Agreement, we
provide the following summary description. Please note, however, that this
description is only a summary, and is not complete, and should be read together
with the entire Rights Agreement, which will be filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from our Company.
The Rights. Our Board authorized the issuance of a Right with respect to
each issued and outstanding share of common stock on the Record Date. The Rights
will initially trade with, and will be inseparable from, the common stock. The
Rights are evidenced only by certificates that represent shares of common stock.
New Rights will accompany any new shares of common stock we issue after the
Record Date until the earliest of the Separation Date, the expiration or the
redemption of the Rights, as described below.
Exercise Price. Each Right will allow its holder to purchase from our
Company one one-thousandth of a share of Series A Preferred Stock ("Preferred
Share") for $20.00, once the Rights become exercisable. This portion of a
Preferred Share will give the stockholder approximately the same dividend,
voting and liquidation rights as would one share of common stock. Prior to
exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.
Exercisability. Until a "separation date" occurs, the Rights will:
o not be exercisable;
o be evidenced by certificates that represent shares of our common
stock; and
o trade with our common stock.
Following a "separation date," the Rights will become exercisable and we
will issue separate certificates representing the Rights, which will trade
separately from the shares of our common stock.
o A "separation date" will occur upon the earlier of:
o 10 business days after a public announcement that a person has become
an "acquiring person;" or
o 15 business days (or such later date as our Board may determine before
any person becomes an "acquiring person") after a person commences a
tender or exchange offer that, if successful, would result in the
person becoming an "acquiring person."
Under our Rights Agreement, a person becomes an "acquiring person" if the
person, alone or together with a group, acquires beneficial ownership of 20% or
more of the outstanding shares of our common stock. However, an "acquiring
person" shall not include us, any of our subsidiaries, any of our employee
benefit plans or any person or entity acting pursuant to such employee benefit
plans. In addition, an "acquiring person" shall not include The Bank of Nova
Scotia, any of its affiliates and associates, or any person that is the direct
transferee of any of the shares of common stock beneficially owned as of the
date of the Rights Agreement by The Bank of Nova Scotia (if such transferee
would otherwise become an acquiring person as a result of such transfer) so long
as these persons have beneficial ownership of less than 25% of the outstanding
shares of our common stock. Our Rights Agreement also contains provisions
designed to prevent the inadvertent triggering of the Rights.
Triggering of Rights.
Flip In. If any person becomes an acquiring person and there is a
separation date, each holder of a Right, other than Rights owned by the
acquiring person which will be voided, will have the right to purchase, upon
payment of the exercise price, shares of common stock having twice the market
value of the exercise price of a Right.
Flip Over. If, after a person becomes an acquiring person and there is a
separation date, we are acquired in a merger or other business combination
transaction or 50% or more of our consolidated assets or earning power are sold,
each holder of a Right will have the right to purchase, upon payment of the
exercise price, shares of common stock of the acquiring company which at the
time of such transaction will have twice the market value of the exercise price
of a Right.
C-2
Exchange. Any time after a separation date and before the acquisition by
any person or group of a majority of the outstanding common stock, our Board may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one share of common
stock per Right, subject to adjustment.
Redemption. Our Board may redeem the Rights, in whole, but not in part, at
any time before a separation date. The redemption price shall be $.001 per
Right. The right to exercise any Rights will terminate when they are redeemed.
The only right of the holders of the Rights after redemption will be to receive
the redemption price.
Amendments. At any time before a person becomes an acquiring person and
there is a separation date, our Board may amend, without the approval of the
holders of the Rights, any provision in the Rights Agreement. After a person
becomes an acquiring person and there is a separation date, our Board may only
amend the provisions of our Rights Agreement in order to:
o cure any ambiguity; or
o make changes that will not adversely affect the interests of the
holders of Rights.
Expiration. The Rights will expire on August 4, 2014, unless earlier
redeemed or exchanged by us.
C-3
