EXHIBIT 99.1
RIGHTS AGREEMENT
dated as of April 6, 1999
by and between
HOMEBASE, INC.
and
First Chicago Trust Company of New York,
A Division of Equiserve
as Rights Agent
Section 1. Certain Definitions...............................................4
Section 2. Appointment of Rights Agent.......................................9
Section 3. Issuance of Rights Certificates...................................9
Section 4. Form of Right Certificates........................................11
Section 5. Countersignature and Registration.................................11
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates......................................................12
Section 7. Exercise of Rights................................................12
Section 8. Cancellation and Destruction of Right Certificates................14
Section 9. Reservation and Availability of Capital Stock.....................14
Section 10. Securities Record Date...........................................15
Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon
Exercise of Rights or Number of Rights...........................15
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights.................................20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power............................................................21
Section 14. Fractional Rights and Fractional Shares..........................23
Section 15. Rights of Action.................................................24
Section 16. Agreement of Right Holders.......................................24
Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder......................................................25
Section 18. Concerning the Rights Agent......................................25
Section 19. Merger or Consolidation or Change of Name of Rights Agent........26
Section 20. Duties of Rights Agent...........................................26
Section 21. Change of Rights Agent...........................................28
Section 22. Issuance of New Right Certificates...............................29
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Section 23. Redemption of Rights.............................................29
Section 24. Exchange of Rights...............................................30
Section 25. Notice of Certain Events.........................................31
Section 26. Notices..........................................................32
Section 27. Supplements and Amendments.......................................32
Section 28. Certain Covenants................................................33
Section 29. Successors.......................................................33
Section 30. Benefits of this Agreement.......................................33
Section 31. Severability.....................................................33
Section 32. Governing Law....................................................34
Section 33. Counterparts.....................................................34
Section 34. Descriptive Headings.............................................34
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TABLE OF EXHIBITS
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Exhibit A -- Form of Right Certificate
1
TABLE OF DEFINED TERMS
----------------------
Term Defined Page Section
------------ ---- -------
Affiliate 1 1
Agreement 1 Introduction
Associate 1 1
Beneficial Owner 1 1
Beneficially Own 1 1
Board of Directors 1 Recital
Business Day 2 1
Close of Business 2 1
Closing Price 2 1
Common Share 3 1
Common Share Substitute 3 11(a)(ii)
Company (HomeBase, Inc.) 1 Introduction
Company (following a Section 13(a) Event) 18 13(a)(iii)
Current Market Price 3 1
Distribution Date 6 3(a)
Exchange Act 3 1
Exempt Person 3 1
Exercise Price 9 7(c)
Expiration Date 3 1
15% Ownership Date 3 1
15% Stockholder 3 1
2
Person 4 1
Preferred Share 4 1
Preferred Share Equivalent 5 11(b)
Record Date 5 Recital
Redemption Date 5 1
Redemption Price 5 23(a)
Right 1 Recital
Right Certificate 5 1
Rights Expiration Date 5 Introduction
Rights Agent 1 Introduction
Section 11(a)(ii) Event 5 11(a)(ii)
Section 13(a) Event 5 13(a)
Securities Act 5 1
Subsidiary 5 1
Surviving Person 18 13(a)
Trading Day 5 1
Unavailable Exchange Shares 27 24(c)
Voting Share 5 1
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RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is made and entered into as of the
6th day of April, 1999 by and between HOMEBASE, INC., a Delaware corporation
(the "Company"), and First Chicago Trust Company of New York, a Division of
Equiserve, a New York corporation (the "Rights Agent"). WHEREAS, the Board of
Directors of the Company (the "Board of Directors") 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 on April 5, 1999 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions set forth herein, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Expiration Date (as such terms are hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 promulgated under the Exchange Act, as in effect on
the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "Beneficially Own" any securities:
(i) that such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated under the Exchange Act, in each
case as in effect on the date hereof;
(ii) that such Person or any of such Person's Affiliates or Associates
has the right to acquire (whether such right is exercisable immediately, or
only after the passage of time, compliance with regulatory requirements,
the fulfillment of a condition or otherwise) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights (other than these Rights), rights, warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the
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Beneficial Owner of, or to Beneficially Own, securities tendered pursuant
to a tender offer or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
(iii) that such Person or any such Person's Affiliates or Associates
has the right to vote, whether alone or in concert with others, pursuant to
any agreement, arrangement or understanding, provided, however, that a
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Person shall not be deemed the Beneficial
4
Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (A) arises solely from a
revocable proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to and
in accordance with the applicable rules and regulations promulgated under
the Exchange Act, and (B) is not also then reportable on Schedule 13D or
13G under the Exchange Act (or any comparable or successor report);
(iv) that are Beneficially Owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (other than voting pursuant to a revocable
proxy as described in the proviso to clause (iii) of this definition of
"Beneficial Owner") or disposing of any securities of the Company; and
(v) that, on any day on or after the Distribution Date, evidence
Rights that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section l(b), a Person engaged
in business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 p.m., Eastern
time, on such date; provided, however, that if such date is not a Business Day,
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it shall mean 5:00 p.m., Eastern time, on the next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be the
last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use or, if
on any such date such stock or other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker that makes a market in such stock or other security
and that is selected by the Board of Directors.
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(f) "Common Share" shall mean one share of the Common Stock, par value
$.01 per share, of the Company or one share of each class of the Company's stock
having the right to vote generally in the election of directors, unless used
with reference to a Person other than the Company, in which case it shall mean
one share of each class of stock of such Person having the right to vote
generally in the election of directors or, if such Person is a Subsidiary of
another Person, one Common Share of the Person that ultimately controls such
Person.
(g) "Common Share Substitute" shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
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however, that if any event shall have caused the Closing Price on any Trading
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Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such non-comparable Closing Price so used shall be appropriately adjusted
by the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other security that is not publicly held or so listed or
traded, and "Current Market Price" of any other property, shall mean the fair
value per share of such stock or unit of such other security, or the fair value
of such other property, respectively, as determined in good faith by the Board
of Directors based upon such appraisals or valuation reports, if any, of such
independent experts as the Board of Directors shall in good faith determine
appropriate, which determination shall be described in a statement filed by the
Company with the Rights Agent, and which determination shall be conclusive and
binding for all purposes on the Company's securityholders and holders of Rights.
(i) "Distribution Date" shall have the meaning ascribed to it in Section 3
hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exempt Person" shall mean the Company, any wholly-owned Subsidiary of
the Company, any employee benefit plan of the Company or of a Subsidiary of the
Company and any Person holding Voting Shares for or pursuant to the terms of any
such employee benefit plan.
(l) "Exercise Price" shall have the meaning ascribed to it in Section 7(c)
hereof.
(m) "Expiration Date" shall mean the tenth anniversary of the date of the
Rights Agreement.
(n) "15% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to
6
Section 13(d) of the Exchange Act) by the Company or a 15% Stockholder
containing sufficient facts making it immediately apparent that such Person has
become a 15% Stockholder.
(o) "15% Stockholder" shall mean any Person that Beneficially Owns 15% or
more of the Voting Shares of the Company then outstanding; provided, however,
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that the term "15% Stockholder" shall not include: (i) an Exempt Person; (ii)
any Person that would not otherwise be a 15% Stockholder but for its Beneficial
Ownership of Rights; (iii) any Person that would not otherwise be a 15%
Stockholder but for a reduction in the number of outstanding Voting Shares
resulting from a stock repurchase program or other similar plan of the Company
or from a self tender offer of the Company, which plan or tender offer commenced
on or after the date hereof; (iv) any Person that is the Beneficial Owner of 15%
or more of the outstanding Voting Shares of the Company as of October 21, 1998
and has filed with the Securities and Exchange Commission, on or prior to such
date, a Schedule 13D or 13G stating that such Person Beneficially Owns 15% or
more of the outstanding Voting Securities of the Company, provided, however,
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that, with respect to clauses (iii) or (iv) of this definition, the term "15%
Stockholder" shall include such Person from and after the first date upon which
(A) such Person, after the date of the commencement of such plan or tender offer
(in the case of clause (iii)), or after the date hereof (in the case of clause
(iv)), shall have acquired Beneficial Ownership of any Voting Shares of the
Company, except as a result of corporate action by the Company not caused,
directly or indirectly, by such Person or by any Affiliate or Associate of such
Person and (B) such Person shall Beneficially Own 15% or more of the Voting
Shares of the Company then outstanding . In calculating the percentage of the
outstanding Voting Shares that are Beneficially Owned by a Person for purposes
of this definition, Voting Shares that are Beneficially Owned by such Person
shall be deemed outstanding, and Voting Shares that are not Beneficially Owned
by such Person and that are subject to issuance upon the exercise or conversion
of outstanding conversion rights, exchange rights, rights, warrants or options
shall not be deemed outstanding. Notwithstanding anything to the contrary in
this Section 1(o), if the Board of Directors determines that a Person that would
otherwise be a 15% Stockholder pursuant to this Section 1(o) has become such
inadvertently, and such Person as promptly as practicable thereafter (but in no
event later than (x) the date that is 10 days after the 15% Ownership Date or
(y) such later date that the Board of Directors has, prior to such tenth day,
set), enters into such other agreement or arrangement as the Board of Directors
approves, then such Person shall not be deemed to be a 15% Stockholder for any
purposes of this Agreement. All determination made as to whether any Person is
or is not a 15% Stockholder shall be conclusive and binding for all purposes
upon all of the Company's securityholders and all holders of Rights.
(p) "Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(q) "Preferred Share" shall mean one share of the Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company, which
shall have the rights and preferences set forth in the Certificate of
Designation for such Series.
7
(r) "Preferred Share Equivalent" shall have the meaning ascribed to it in
Section 11(b) hereof.
(s) "Record Date" shall have the meaning ascribed to it in the recitals
hereto.
(t) "Redemption Date" shall mean the date of the action of the Board of
Directors authorizing and directing the redemption of the Rights pursuant to
Section 23(a) hereof or the exchange of the Rights pursuant to Section 24(a)
hereof.
(u) "Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.
(v) "Right Certificate", as that term is used with respect to any period
prior to the Distribution Date, shall have the meaning ascribed to it in Section
3(b) hereof, and, as that term is used with respect to any period on or after
the Distribution Date, shall have the meaning ascribed to it in Section 3(c)
hereof.
(w) "Rights Expiration Date" shall mean the Expiration Date, except if
there has been a Distribution Date, then it shall mean the tenth anniversary of
the Distribution Date.
(x) "Section 11(a)(ii) Event " shall have the meaning ascribed to it in
Section 11(a)(ii) hereof.
(y) "Section 13(a) Event " shall have the meaning ascribed to it in Section
13(a) hereof.
(z) "Securities Act" shall mean the Securities Act of 1933, as amended.
(aa) "Subsidiary" of any Person shall mean any corporation or other Person
of which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(bb) "Trading Day" shall mean, as to any stock or other security, a day on
which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(cc) "Voting Share" shall mean (i) a Common Share of the Company and (ii)
any other share of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Shares in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
Section 2. Appointment of Rights Agent. The Company hereby appoints
---------------------------
the Rights Agent to act as agent for the Company and the holders of Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company
8
may from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
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(a) "Distribution Date" shall mean the date, after the date hereof, that
is the earliest of (i) the tenth Business Day (or such later day as shall be
designated by the Board of Directors) following the date of the commencement of,
or the first public announcement of the intent of any Person, other than an
Exempt Person, to commence a tender offer or exchange offer, the consummation of
which would cause any Person to become a 15% Stockholder, (ii) the date of the
first Section 11(a)(ii) Event or (iii) the date of the first Section 13(a)
Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common Shares shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send, at the expense of the
Company, by first-class, postage-prepaid mail to each record holder of Common
Shares, as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit A hereto representing one Right for each
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Common Share so held. From and after the Distribution Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer agent or registrar for
such Rights, shall be the record holders of such Rights.
(d) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of April 6, 1999 by and
between HomeBase, Inc. and First Chicago Trust Company of New York, a
Division of Equiserve, as Rights Agent (the "Rights Agreement"), as
amended to date, the terms and conditions of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of HomeBase, Inc. Under certain circumstances specified
in the Rights Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this certificate. Under
certain circumstances specified in the Rights Agreement, Rights
beneficially owned by certain persons may become null and void.
9
HomeBase, Inc. will mail to the record holder of this certificate a copy
of the Rights Agreement without charge promptly following receipt of a
written request therefor. As described in the Rights Agreement, Rights
Beneficially Owned by any Person who becomes a 15% Stockholder or any
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement) shall become null and void.
(e) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant to the terms
of a Rights Agreement dated as of April 6, 1999 by and between HomeBase,
Inc. and First Chicago Trust Company of New York, a Division of Equiserve,
as Rights Agent.
(f) In the event that at any time on or after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Expiration Date, the
Company shall issue any Common Shares pursuant to the exercise of conversion
rights, exchange rights, rights (other than Rights), warrants or options that
shall have been issued or granted prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event, then,
unless the Board of Directors shall have provided otherwise at the time of the
issuance or grant of such conversion rights, exchange rights, rights (other than
Rights), warrants or options, the Rights Agent shall, as soon as practicable
after the date of such event, send by first-class, postage-prepaid mail to the
record holder of such Common Shares, at the address of such holder as shown on
the records of the Company, a Right Certificate substantially in the form of
Exhibit A hereto representing one Right for each Common Share so issued.
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(g) Notwithstanding anything to the contrary in this Section 3, the Rights
Agent shall not countersign and deliver a Right Certificate to any Person if
such Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d)
hereof. Any determination made by the Board of Directors as to whether any
Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d)
hereof, shall be conclusive and binding upon the Company, the Rights Agent, all
holders of Rights and all other securityholders of the Company.
Section 4. Form of Right Certificates. The Right Certificates and
--------------------------
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and if
issued, shall be substantially the same as Exhibit A hereto, and may have such
---------
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to conform to usage. Subject to Section 22
hereof,
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Right Certificates, whenever issued, that are issued in respect of Common Shares
that were issued and outstanding as of the Close of Business on the Distribution
Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Vice Chairman of the Board, its President or any
Vice President, either manually or by facsimile signature, and may have affixed
thereto the Company's seal or a facsimile thereof attested by its Secretary or
any Assistant Secretary, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nevertheless
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person who at the
actual date of such execution shall be a proper officer of the Company to sign
such Right Certificate, even though such person was not such an officer at the
date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept at its principal offices books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at any
time after the Close of Business on the Distribution Date, and so long as the
Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split-up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case
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of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of such Right Certificate if mutilated, the
Company shall issue and deliver to the Rights Agent for delivery to the record
holder of such Right Certificate a new Right Certificate of like tenor in lieu
of such lost, stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the Rights
Agent shall not countersign and deliver a Right Certificate to any Person if
such Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d)
hereof. Any determination made by the Board of Directors as to whether any
Right Certificate represents, or would represent when held by such Person,
Rights that had become or would become null and void pursuant to Section 7(d)
hereof, shall be conclusive and binding upon the Company, the Rights Agent, all
holders of Rights and all other securityholders of the Company.
Section 7. Exercise of Rights.
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(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Rights Expiration Date, the registered holder of any Right Certificate may
exercise the Rights represented thereby in whole or in part upon surrender of
such Right Certificate, with the form of election to purchase, including
certificate, on the reverse side thereof completed and duly executed, with
signature guaranteed, to the Rights Agent at the office of the Rights Agent at
000 Xxxxxxxxxx Xxxx., Xxxxxx Xxxx, XX 00000, together with payment of the
Exercise Price for each Right exercised. Upon the exercise of an exercisable
Right and payment of the Exercise Price in accordance with the provisions of
this Agreement, the holder of such Right shall be entitled to receive, subject
to adjustment as provided herein, one one-thousandth of a Preferred Share (or,
following the occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or other securities).
(c) The "Exercise Price" for the exercise of each Right shall initially be
$50.00 and shall be payable in lawful money of the United States of America in
accordance with Section 7(f) hereof. The Exercise Price and the number of
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the earlier of the date of the first Section 11(a)(ii) Event or the date
of the first Section 13(a) Event, any Rights that are or were Beneficially Owned
by a 15% Stockholder at any time on or after the Distribution Date shall be null
and void, and for all purposes of this Agreement such Rights shall thereafter be
deemed not to be outstanding, and any holder of such Rights (whether or not such
12
holder is a 15% Stockholder or an Affiliate or Associate of a 15% Stockholder)
shall thereafter have no right to exercise or transfer such Rights.
(e) Prior to the Distribution Date, if the Board of Directors shall have
determined that such action adequately protects the interests of the holders of
Rights, the Company may, in its discretion, substitute for all or any portion of
the Preferred Shares that would otherwise be issuable (after the Close of
Business on the Distribution Date) upon the exercise of each Right and payment
of the Exercise Price (i) cash, (ii) other equity securities of the Company,
(iii) debt securities of the Company, (iv) other property or (v) any combination
of the foregoing, in each case having an aggregate Current Market Price equal to
the aggregate Current Market Price of the Preferred Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
Company takes any action pursuant to this Section 7(e), such action shall apply
uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase, including certificate, completed and duly
executed, with signature guaranteed, accompanied by payment of the Exercise
Price for each Right to be exercised and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check or cashier's check payable
to the order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from the transfer agent of the Preferred Shares (or, following the
occurrence of a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares
and/or securities) certificates for the number of Preferred Shares (or such
other securities) to be purchased, and the Company hereby irrevocably authorizes
such transfer agent to comply with all such requests, and/or, as provided in
Section 14 hereof, requisition from the depositary agent described therein
depositary receipts representing such number of one-thousandths of a Preferred
Share (or such other securities) as are to be purchased (in which case
certificates for the Preferred Shares (or such other securities) represented by
such receipts shall be deposited by the transfer agent with such depositary
agent) and the Company hereby directs such depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional Preferred Shares (or such other
securities) in accordance with Section 14 hereof, (iii) after receipt of such
certificates, depositary receipts or cash, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify under the
Securities Act and any applicable securities law of any jurisdiction the
Preferred Shares to be issued pursuant to the exercise of the Rights; provided,
--------
however, that nothing contained in this Section 7 shall relieve the Company of
-------
its obligations under Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall exercise
less than all of the Rights represented thereby, a new Right Certificate
representing Rights equivalent to the
13
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to such holder's duly authorized
assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Sections 7(e) and 9(f) hereof, the Company shall cause to
be reserved and kept available out of its authorized and unissued equity
securities (or out of its authorized and issued equity securities held in its
treasury), the number of such equity securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the Rights
are listed on any national securities exchange, the Company shall use its best
efforts, from and after such time as the Rights become exercisable, to cause all
such securities issued or reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of the
Rights, the Company shall use its best efforts, from and after the Distribution
Date, to register and qualify such securities under the Securities Act, the
Exchange Act and any other applicable securities laws and to keep such
registration effective until the earlier of the Redemption Date or the
Expiration Date.
(d) The Company shall take all such action as may be necessary to ensure
that all securities delivered upon exercise of the Rights shall, at the time of
delivery of the certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable securities.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the
14
exercise of any Right until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
Section 10. Securities Record Date. Each Person in whose name any
----------------------
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate representing such Rights was duly surrendered
and payment of the Exercise Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
-------- -------
which the securities transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
-------------------------------------------------------
Upon Exercise of Rights or Number of Rights. The Exercise Price, the number and
-------------------------------------------
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event that the Company shall at any time after the Close
of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date (A) declare or pay
any dividend on the Preferred Shares payable in Preferred Shares or Voting
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue Preferred Shares or other securities of the Company (other than
those for which an adjustment is required under Section 11(b) hereof) in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) or in a reorganization
of the Company, then, and upon each such event, the number and kind of
Preferred Shares or other securities issuable upon the exercise of a Right
on the date of such event shall be proportionately adjusted so that the
holder of any Right exercised on or after such date shall be entitled to
receive, upon the exercise thereof and payment of the Exercise Price, the
aggregate number and kind of Preferred Shares or other securities or other
property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was
exercisable and the transfer books of the Company were open, such holder
would have owned upon such exercise and would have been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs that would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
15
(ii) In the event that a 15% Ownership Date shall have occurred and
neither the Redemption Date nor the Expiration Date shall have occurred
prior to the tenth Business Day following such 15% Ownership Date (a
"Section 11(a)(ii) Event"), then, and upon each such Section 11(a)(ii)
Event, proper provision shall be made so that, except as provided in
Section 7(d) hereof, each holder of a Right shall thereafter (except as
provided in the next sentence) have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of the
then current Exercise Price, such number of Common Shares of the Company as
shall equal the result obtained by (A) multiplying the then current
Exercise Price by the then number of one-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to such Section
11(a)(ii) Event (or, if the Distribution Date shall not have occurred prior
to the date of such Section 11(a)(ii) Event, the number of one-thousandths
of a Preferred Share for which a Right would have been exercisable if the
Distribution Date had occurred on the Business Day immediately preceding
the date of such Section 11(a)(ii) Event), and (B) dividing that product by
50% of the Current Market Price of a Common Share on the date of occurrence
of the relevant Section 11(a)(ii) Event. In the sole discretion of the
Board of Directors, with respect to any Section 11(a)(ii) Event, the
Company may substitute, in lieu of some or all of the Common Shares
receivable pursuant to the preceding sentence, (A) cash, (B) equity
securities of the Company (including, without limitation, shares, fractions
of shares or units of shares of preferred stock and/or Common Shares of the
Company), (C) debt securities of the Company (D) other property or (E) any
combination of the foregoing (categories (A) through (E), inclusive, each a
"Common Share Substitute," constitute the "Common Share Substitutes"), in
each case having an aggregate Current Market Price equal to the aggregate
Current Market Price of the Common Shares for which substitution is made.
Subject to Section 7(d) hereof, in the event that the Company makes any
substitution pursuant to the immediately preceding sentence, such action
shall apply uniformly to all outstanding Rights. Successive adjustments
shall be made pursuant to this paragraph each time a Section 11(a)(ii)
Event occurs.
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
initially to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares ("Preferred
Share Equivalents")) or securities convertible into Preferred Shares or
Preferred Share Equivalents, at a price per Preferred Share or Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Current
Market Price per Preferred Share on such record date, then, and upon each such
event, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be equal to the sum of
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares that the aggregate offering price of the total number of
Preferred Shares and/or Preferred Share Equivalents to be so offered (and/or the
aggregate initial conversion price of the convertible securities to be so
offered) would purchase at such Current
16
Market Price, and the denominator of which shall be equal to the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or Preferred Share Equivalents to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible); provided, however, that if such rights,
-------- -------
options or warrants are not exercisable immediately upon issuance but become
exercisable only upon the occurrence of a specified event or the passage of a
specified period of time, then the adjustment to the Exercise Price shall be
made and become effective only upon the occurrence of such event or such passage
of time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment to the Exercise Price shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price that would
then be in effect if such record date had not been fixed.
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of assets (other than a distribution for
which an adjustment is required under Section 11(a)(i) or (b) hereof or a
regular quarterly cash dividend), then the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be equal to the excess of the Current Market Price per Preferred Share on
such record date over and above the fair market value of the portion of the
securities or assets to be so distributed with respect to one Preferred Share,
and the denominator of which shall be equal to such Current Market Price per
Preferred Share. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively deemed to be the Current Market Price per
Common Share multiplied by 1,000.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the then
current Exercise Price; provided, however, that any adjustments that by reason
-------- -------
of this Section 11(e) are not required to be made shall be cumulated and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one-thousandth of a
Common Share or other share or one-millionth of a Preferred Share, as the case
may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right shall, upon exercise thereof, be entitled to
receive any securities of the Company
17
other than Preferred Shares, and if an event occurs in respect of such
securities that, if it were to occur in respect of Preferred Shares, would
require an adjustment under this Section 11 in respect of Preferred Shares, then
the number of such other securities so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to Preferred
Shares contained in this Section 11, and the other provisions of this Agreement
with respect to Preferred Shares shall apply on like terms to any such other
securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) below, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter represent
the right to purchase, at the adjusted Exercise Price, that number of one-
thousandths of a Preferred Share (calculated to the nearest one-millionth of a
Preferred Share) obtained by multiplying (i) the number of one-thousandths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of the
Exercise Price, to adjust the number of Rights instead of making any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one one-thousandth of a Right)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
representing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of such adjustment, and upon surrender thereof if required by the Company,
new Right Certificates representing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be
18
so distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one-thousandths of a Preferred Share issuable upon the exercise of one
Right, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price per one one-thousandth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below one one-thousandth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-thousandths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer, until the occurrence of such event, the
issuance to the holder of any Right exercised after such record date of the
number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-thousandths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
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the Company shall deliver to such holder a due xxxx or other appropriate
instrument representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such further adjustments in the number of one-
thousandths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
Company in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly
for cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to in Section 11(b) hereof, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earliest
of the date of the first Section 11(a)(ii) Event, the date of the first Section
13(a) Event, the Redemption Date or the Expiration Date, (i) pay any dividend on
the Common Shares payable in Common Shares,
19
(ii) subdivide the outstanding Common Shares, (iii) combine the outstanding
Common Shares into a smaller number of Common Shares or (iv) issue Common Shares
in a reclassification of the Common Shares (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be equal to the number of Common Shares outstanding immediately after such
event. Successive adjustments shall be made pursuant to this Section 11(n) each
time such a dividend is paid or such a subdivision, combination or
reclassification is effected. If an event occurs that would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
Section 12. Certificate of Adjusted Exercise Price or Number of
---------------------------------------------------
Shares Issuable Upon Exercise of Rights. Whenever an adjustment is made as
---------------------------------------
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the Rights Agent and with each
transfer agent for the securities issuable upon exercise of the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 25 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or to give such notice
shall not affect the validity or the force and effect of such adjustment. Any
adjustment to be made pursuant to Sections 11 or 13 hereof shall be effective as
of the date of the event giving rise to such adjustment. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained, and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of such an adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
--------------------------------------------
Assets or Earning Power.
-----------------------
(a) In the event (a "Section 13(a) Event") that, at any time on or after
the 15% Ownership Date and prior to the earlier of the Redemption Date or the
Expiration Date, (1) the Company shall, directly or indirectly, consolidate with
or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (2) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (3) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly-owned
Subsidiaries (such Persons, together with the Persons described in clauses (1)
and (2) above shall be collectively referred to in this
20
Section as the "Surviving Person"), then, and in each such case, proper
provision shall be made so that:
(i) except as provided in Section 7(d) hereof, each holder of a Right
shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then current
Exercise Price, in lieu of the securities or other property otherwise
purchasable upon such exercise, such number of validly authorized and
issued, fully paid and nonassessable Common Shares of the Surviving Person
(and if such Surviving Person has more than one class or series of Common
Shares, such number of validly authorized and issued, fully paid and
nonassessable Common Shares of each series or class) as shall be equal to a
fraction, the numerator of which is the product of the then current
Exercise Price multiplied by the number of one-thousandths of a Preferred
Share purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of one-
thousandths of a Preferred Share that would have been so purchasable if the
Distribution Date had occurred on the Business Day immediately preceding
the date of such Section 13(a) Event, or, if a Section 11(a)(ii) Event has
occurred prior to such Section 13(a) Event, the product of the number of
one-thousandths of a Preferred Share purchasable upon the exercise of a
Right (or, if the Distribution Date shall not have occurred prior to the
date of such Section 11(a)(ii) Event, the number of one-thousandths of a
Preferred Share that would have been so purchasable if the Distribution
Date had occurred on the Business Day immediately preceding the date of
such Section 11(a)(ii) Event) immediately prior to such Section 11(a)(ii)
Event, multiplied by the Exercise Price in effect immediately prior to such
Section 11(a)(ii) Event), and the denominator of which is 50% of the
Current Market Price per Common Share of the Surviving Person on the date
of consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company " shall thereafter be deemed to refer to the
Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as
may be necessary to ensure that the provisions hereof shall thereafter be
applicable to its Common Shares thereafter deliverable upon the exercise of
Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the sale
or transfer in one or more transactions of assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), but less than 100% thereof, then each Person acquiring all
or a portion thereof shall assume the obligations of the
21
Company as to a fraction of each of the Rights equal to the fraction of the
assets of the Company and its Subsidiaries (taken as a whole) acquired by such
Person, and the obligations of the Company as to the remaining fraction of each
of the Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(i) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing, use its best efforts to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the Expiration Date, and similarly comply with
all applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
shall thereafter be exercisable only in the manner described in Section 13(a)
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that represent fractional Rights. If the Company
shall determine not to issue
22
such fractional Rights, the Company shall pay to the registered holders of the
Right Certificates with respect to which such fractional Rights would otherwise
be issuable, at the time such fractional Rights would otherwise have been issued
as provided herein, an amount in cash equal to the same fraction of the Current
Market Price of a whole Right on the Business Day immediately prior to the date
upon which such fractional Rights would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common Shares
or Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of Rights, or to distribute
certificates that represent fractional Common Shares or Preferred Shares (other
than fractions that are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-
thousandth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Preferred Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the Company shall pay to the registered holders of Right Certificates with
respect to which such fractional Common Shares or Preferred Shares would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same fraction of the Current Market Price of a
whole Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
----------------
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.
23
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Stockholder. No holder, as such, of any Right or Right Certificate shall be
-----------
entitled to vote, receive dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent 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 disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability. The indemnification provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection
24
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
(c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
------
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. If, at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificate and in
this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificate and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance of the Rights, shall be bound:
25
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel (who may be legal counsel for the Company), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, the Treasurer,
the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming null and void pursuant to Section 7(d)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 7, 11, 13 and 23 hereof, or
the ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights represented by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate, or as to whether any Preferred Shares or Common Shares or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board,
26
the Vice Chairman, the President, any Vice President, the Chief Financial
Officer, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than ten 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 from the Company in
response to such application to the contrary.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights 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) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as a 15% Stockholder, Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
(l) If, with respect to any Rights 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 not been
completed, the Rights Agent shall not take any further
27
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30-days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and, at the expense of the Company to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30-days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting
as such, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the Company
shall become the Rights Agent and the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of the States of New York or California (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the States of New York or
California), in good standing, having a principal office in New York or
California, that is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose of this Agreement and so that the successor Rights Agent may
appropriately act as Rights Agent hereunder. Not later than the effective date
of any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
----------------------------------
of the provisions of this Agreement or of the Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in such
form as may be approved by the Board of Directors in order to reflect any
adjustment or change in the Exercise Price and the number or kind or class
28
of shares or other securities or property purchasable upon exercise of the
Rights in accordance with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Expiration
Date, the Board of Directors may, at its option, authorize and direct the
redemption of all, but not less than all, of the then outstanding Rights at a
redemption price of $.001 per Right, as such redemption price shall be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights.
(b) Immediately upon the action of the Board of Directors authorizing and
directing the redemption of the Rights pursuant to subsection (a) of this
Section 23, or at such time and date thereafter as it may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within ten (10) Business Days after the date of
such action, the Company shall give notice of such redemption to the holders of
Rights by mailing such notice to all holders of Rights at their last addresses
as they appear upon the registry books of the Rights Agent or, if prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives such notice, but neither the failure
to give any such notice nor any defect therein shall affect the legality or
validity of such redemption. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than that
specifically set forth in Section 24 hereof or in this Section 23, or in
connection with the purchase of Common Shares prior to the earlier of the date
of the first Section 11(a)(ii) Event or the date of the first Section 13(a)
Event.
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. Exchange of Rights.
------------------
(a) At any time during the period of 180 days after a Section 11(a)(ii)
Event, the Board of Directors may, in its sole discretion, authorize and direct
the exchange of each of the then outstanding Rights for Common Shares or Common
Share Substitutes, or any combination of the foregoing (all as determined in the
sole discretion of the Board of Directors), having an aggregate Current Market
Price equal to the result obtained by (i) multiplying the Current Market Price
per Common Share on the record date for such exchange by the number of Common
Shares for which a Right is exercisable on such record date and (ii) subtracting
from such product the Exercise Price on such Record Date, and the Company shall
so exchange the Rights. Subject to
29
Section 7(d) hereof, in the event that the Company takes any action pursuant to
this Section 24, such action shall apply uniformly to all outstanding Rights.
(b) Immediately upon the action of the Board of Directors authorizing and
directing the exchange of the Rights pursuant to subsection (a) of this Section
24, or at such time and date thereafter as it may specify, and without any
further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive such number of Common Shares and/or Common Share Substitutes determined
in accordance with Section 24(a) hereof. Within ten (10) Business Days after
the date of such action, the Company shall give notice of such exchange to the
holders of Rights by mailing such notice to all holders of Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, if
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives such notice, but
neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of such exchange. Each such notice of exchange shall
state the method by which the Rights will be exchanged for Common Shares and/or
Common Share Substitutes.
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or pay any
dividend on or make any distribution with respect to its Common Shares or
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Common Shares or Preferred Shares options, rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification involving only the subdivision of outstanding shares), (iv)
to effect any consolidation or merger with or into, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then and in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action that shall specify the record date for the
purpose of such dividend or distribution, or the date upon which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares or Preferred Shares, whichever date
shall be the earlier. The failure to give the notice required by this Section
25 or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
30
(b) Upon the occurrence of each Section 11(a)(ii) Event and each Section
13(a) Event, the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, specifying the event and the consequences of the
event to holders of Rights under Sections 11 and 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
HomeBase, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made to or on the Rights Agent (i) by the
Company shall be sufficiently given or made if sent, postage prepaid, by
registered or certified mail, addressed to the principal office of the Rights
Agent as set forth below (until another address is filed in writing with the
Company) or (ii) by the holder of any Right Certificate shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to the
principal office of the Rights Agent as set forth below (until another address
is filed in writing with the Company), and shall be deemed given upon actual
receipt. The Company hereby agrees that it shall encourage the holders of the
Right Certificates, in any and all writings to such holders regarding the Rights
or this Agreement, to give or make any notice or demand authorized by this
Agreement by registered or certified mail, addressed to the principal office of
the Rights Agent as follows (until another address is filed in writing with the
Company):
First Chicago Trust Company of New York,
A Division of Equiserve
000 Xxxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attention: Corporate Actions Administration
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.
--------------------------
(a) The Board of Directors may, from time to time, without the approval of
any holders of Rights, supplement or amend any provision of this Agreement in
any manner, whether or not such supplement or amendment is adverse to any holder
of Rights, and direct the Rights
31
Agent so to supplement or amend such provision, and the Rights Agent shall so
supplement or amend such provision; provided, however, that from and after the
-------- -------
earliest of (i) the date of the first Section 11(a)(ii) Event, (ii) the date of
the first Section 13(a) Event, (iii) the Redemption Date or (iv) the Expiration
Date, this Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights other
than a 15% Stockholder or a Surviving Person.
(b) From and after the earlier of the date of the first Section 11(a)(ii)
Event or the date of the first Section 13(a) Event and prior to the Rights
Expiration Date, the Company shall not effect any amendment to the Articles
Supplementary for the Preferred Shares that would materially and adversely
affect the rights, privileges or preferences of the Preferred Shares without the
prior approval of the holders of two-thirds or more of the then outstanding
Rights. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement in any manner adverse to the Rights Agent will be effective
against the Rights Agent without the execution of such supplement or amendment
by the Rights Agent.
Section 28. Certain Covenants. Subject to Section 27 hereof and the
-----------------
other provisions of this Agreement, from and after the earlier of the date of
the first Section 11(a)(ii) Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Expiration Date, the
Company shall not (a) issue or sell, or permit any Subsidiary to issue or sell,
to a 15% Stockholder or a Surviving Person, or any Affiliate or Associate of a
15% Stockholder or a Surviving Person, or any Person holding Voting Shares of
the Company that are Beneficially Owned by a 15% Stockholder or a Surviving
Person, (i) any rights, options, warrants or convertible securities on terms
similar to, or that materially adversely affect the value of, the Rights or (ii)
Preferred Shares, Common Shares or shares of any other class of capital stock,
if such sale is intended to or would materially adversely affect the value of
the Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
Common Shares representing Rights (other than those Rights that have become null
and void) any legal or equitable right, remedy or claim under this Agreement,
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and such registered holders of Right Certificates and
certificates for Common Shares representing Rights.
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
32
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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 Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state, except as to the rights and obligations of
the Rights Agent which shall be governed by and construed in accordance with the
laws of the state of New York.
Section 33. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute but
one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
--------------------
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HOMEBASE, INC.
Attest:
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------------- -------------------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Secretary Title: President and Chief Executive Officer
First Chicago Trust Company of New York, a
Division of Equiserve, as Rights Agent
Attest:
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. X'Xxxxx
------------------------------------------------- -------------------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. X'Xxxxx
Title: Customer Service Officer Title: Vice President
33
Exhibit A
FORM OF RIGHTS CERTIFICATE
Certificate No. R______________ ______________ Rights
NOT EXERCISABLE AFTER April 6, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
CORPORATION, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY A 15% STOCKHOLDER OR
AN AFFILIATE OR ASSOCIATE OF A 15% STOCKHOLDER (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME A 15% STOCKHOLDER OR AN
AFFILIATE OR ASSOCIATE OF A 15% STOCKHOLDER (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(d) OF SUCH AGREEMENT.*]
RIGHTS CERTIFICATE
HOMEBASE, 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 April 6, 1999 (the "Rights
Agreement"), between HomeBase, Inc., a Delaware corporation (the "Corporation"),
and First Chicago Trust Company of New York, a Division of Equiserve a New York
corporation (the "Rights Agent"), to purchase from the Corporation at any time
prior to 5:00 P.M. (Eastern time) on April 6, 2009 at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights Agent,
one one-thousandth of a fully paid, non-assessable share of Preferred Stock (the
"Preferred Stock") of the Corporation, at a purchase price of $___ per one one-
thousandth of a share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The Purchase Price may be paid by bank draft,
certified bank check or money order payable to the order of the Corporation.
------------------
* The portion of the legend in brackets shall be inserted only if
applicable, shall be modified to apply to a 15% Stockholder, and shall replace
the preceding sentence.
34
The number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of ______________, 1999, based on the Preferred Stock as constituted at such
date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
Beneficially Owned by (i) a 15% Stockholder or an Affiliate or Associate of a
15% Stockholder (as such terms are defined in the Rights Agreement), (ii) a
transferee of a 15% Stockholder, (or of any such Associate or Affiliate), or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a 15% Stockholder (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the 15% Stockholder becoming
such, such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
15% Ownership Dates (as such term is defined in the Rights Agreement).
The Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights,
limitations of Rights, and obligations, duties and immunities of the Rights
Agent, the Corporation and the holders of the Rights Certificates, which
limitations of Rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent and
are also available upon written request to the Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
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 (i) redeemed by the Corporation at its option at a
redemption price of $.001 per Right or (ii) exchanged by the Corporation in
whole or part for Common Shares, substantially equivalent rights, or other
consideration as determined by the Corporation.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth
35
of a share of Preferred Stock, which may, at the election of the Corporation, be
evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Corporation which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meeting or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal.
Dated as of _____________, ____
The "Corporation":
(Seal) HOMEBASE, INC., a
Delaware corporation
:
-----------------------------------
Title:
-----------------------------------
-
The "Rights Agent":
First Chicago Trust Company of New York, a
Division of Equiserve, a New York corporation
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
36
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder
if such holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________ hereby sells, assigns
and transfers unto
-------------------------
--------------------------------------------------
--------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the within-
named Corporation with full power of substitution.
DATED:
--------------------------------- -----------------------------------
(Signature)
SIGNATURE GUARANTEED:
---------------------------------
(Signature)
37
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 a 15% Stockholder or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became a 15% Stockholder
or an Affiliate or Associate of any such Person.
DATED:
----------------------------- ---------------------------------------
(Signature)
SIGNATURE GUARANTEED:
-------------------------------------
(Signature)
38
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
39
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE
RIGHTS REPRESENTED BY THE RIGHTS CERTIFICATE)
TO: HOMEBASE, INC.
The undersigned hereby irrevocably elects to exercise ------------------
Rights represented by this Rights Certificate to purchase the number of one one-
thousandths of a share of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Corporation or of any other Person which
may be issuable upon the exercise of the Rights) and requests that certificates
for such shares be issued in the name of and delivered to:
Name And Address:
-------------------------------
-------------------------------
-------------------------------
Social Security or Other
Identifying Number: -------------------------------
DATED:
----------------------------- -------------------------------
(Signature)
SIGNATURE GUARANTEED:
-------------------------------
(Signature)
40
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 a 15% Stockholder or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became a 15% Stockholder
or an Affiliate or Associate of any such Person.
DATED:
---------------------------- ---------------------------------------
(Signature)
SIGNATURE GUARANTEED:
----------------------------------------
(Signature)
41
