SIZELER PROPERTY INVESTORS, INC.
AND
THE BANK OF NEW YORK
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF AUGUST 6, 1998
TABLE OF CONTENTS
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RECITALS............................................................... 1
TERMS OF AGREEMENT..................................................... 1
Section 1. Certain Definitions........................................ 1
Section 2. Appointment of Rights Agent................................ 7
Section 3. Issuance of Rights Certificates............................ 7
(a) Distribution Date; Rights Certificates................. 7
(b) Summary of Rights; Common Stock Certificates........... 8
(c) Legend................................................. 8
Section 4. Form of Rights Certificates................................ 9
(a) Form; Date............................................. 9
(b) Acquiring Person or Adverse Person Legend.............. 9
Section 5. Countersignature and Registration.......................... 10
(a) Signatures............................................. 10
(b) Registration and Transfer.............................. 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates............................................... 11
(a) Procedures............................................. 11
(b) Issuance of New Rights Certificate..................... 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights..................................................... 11
(a) Exercise............................................... 11
(b) Purchase Price; Form of Payment........................ 12
(c) Action by Rights Agent................................. 12
(d) Partial Exercise....................................... 13
(e) Termination of Acquiring Person's or Adverse Person's
Rights................................................. 13
(f) Certificate by Registered Holder; Evidence of Identity. 13
Section 8. Cancellation of Rights Certificates........................ 14
Section 9. Reservation and Availability of Capital Stock.............. 14
(a) Reservation of Stock................................... 14
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(b) Listing................................................ 14
(c) Registration........................................... 14
(d) Covenant Regarding Stock............................... 15
(e) Transfer Taxes and Charges............................. 15
Section 10. Preferred Stock Record Date................................ 15
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights........................................... 16
(a) Certain Adjustments.................................... 16
(b) Purchase Price Adjustment--Preferred Stock............. 20
(c) Purchase Price Adjustment--Distribution Other Than
Preferred Stock........................................ 20
(d) Current Market Price................................... 21
(e) Purchase Price Adjustment Threshold.................... 22
(f) Purchase Price Adjustment--Equivalent Shares........... 22
(g) Post-Adjustment Rights Issuances....................... 23
(h) Preferred Stock Anti-Dilution.......................... 23
(i) Adjustment of Number of Rights......................... 23
(j) Form of Rights Certificates............................ 24
(k) Adjustment Below Par or Stated Value................... 24
(l) Adjustment Effective as of Effective Date.............. 24
(m) Tax Adjustments........................................ 24
(o) Additional Restrictions to Protect Benefits of Rights.. 25
(p) Common Stock Adjustments............................... 25
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power...................................... 26
(a) Flip-over Event........................................ 26
(b) Principal Party........................................ 27
(c) Conditions to Consummation of Flip-over Event.......... 27
(d) Certain Exceptions..................................... 28
(e) Certain Protections for Rights Agent................... 28
Section 14. Fractional Rights and Fractional Shares.................... 28
(a) Fractional Rights...................................... 28
(b) Fractional Shares of Preferred Stock................... 29
(c) Fractional Shares of Common Stock...................... 29
(d) Waiver of Fractional Rights and Shares................. 29
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Section 15. Rights of Action........................................... 30
Section 16. Agreement of Rights Holders................................ 30
Section 17. Rights Certificate Holder Not Deemed a Shareholder......... 31
Section 18. Concerning the Rights Agent................................. 31
(a) Compensation............................................ 31
(b) Reliance................................................ 31
Section 19. Merger or Consolidation or Change of Name of Rights Agent... 32
(a) Successor............................................... 32
(b) Prior Countersignatures................................. 32
Section 20. Duties of Rights Agent...................................... 32
(a) Legal Counsel........................................... 32
(b) Certification by Company................................ 32
(c) Liability for Certain Conduct........................... 33
(d) Non-Liability for Statements of Fact and Recitals Herein 33
(e) Non-Responsibility for Certain Matters.................. 33
(f) Further Assurances by Company........................... 33
(g) Instructions for Company Officers....................... 33
(h) Dealing in Rights; Other Transactions with Company...... 34
(i) Use of Agents; Reasonable Care by Agents................ 34
(j) Expenditures............................................ 34
(k) Consultation with Company Concerning Surrendered Rights
Certificates............................................ 34
(l) Notice to Rights Agent.................................. 35
Section 21. Change of Rights Agent...................................... 35
Section 22. Issuance of New Rights Certificates......................... 35
Section 23. Redemption and Termination.................................. 36
(a) Redemption.............................................. 36
(b) Effect of Redemption; Procedure......................... 36
(c) Limited Deferred Redemption............................. 37
Section 24. Exchange.................................................... 37
(a) Right to Exchange....................................... 37
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(b) Effect of Exchange; Procedure........................... 37
(c) Common Stock Equivalents................................ 38
(d) Insufficient Common Stock............................... 38
(e) Fractional Shares....................................... 38
Section 25. Notices..................................................... 38
(a) Addresses and Notice Method for all Notices............. 38
(b) Notice of Certain Distributions, etc.................... 39
(c) Other Transactions...................................... 40
Section 26. Supplements and Amendments.................................. 40
Section 27. Successors.................................................. 41
Section 28. Determinations and Actions by the Board, Disinterested
Directors, etc.............................................. 41
Section 29. Benefits of this Agreement.................................. 42
Section 30. Severability................................................ 42
Section 31. Governing Law............................................... 43
Section 32. Counterparts................................................ 43
Section 33. Descriptive Headings........................................ 43
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 6, 1998 (the "Agreement"),
between SIZELER PROPERTY INVESTORS, INC., a Delaware corporation (the
"Company"), and THE BANK OF NEW YORK, a New York banking corporation (the
"Rights Agent").
RECITALS
On August 6, 1998 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend distribution of
one Right for each share of common stock, par value $0.01 per share, of the
Company (the "Common Stock") outstanding at the close of business on August 27,
1998 (the "Record Date"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the Distribution Date, each Right initially representing the right to purchase
one one-thousandth (1/1000) of a share of Series A Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Amendment of the Certificate of Incorporation of the Company
attached hereto as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
TERMS OF AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan or (iv) any Person who becomes an Acquiring Person
solely as a result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of shares of Common Stock by the Company,
unless and until such Person shall purchase or otherwise become (as a result of
actions taken by such Person or its Affiliates or Associates) the Beneficial
Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Common Stock of the Company
then outstanding by reason of share repurchases by the Company and shall, after
such share repurchases by the Company, become the Beneficial Owner of any
additional Common Stock of the Company, then such Person shall be deemed to be
an "Acquiring Person," unless upon the consummation of the
acquisition of such additional shares of Common Stock such Person does not
beneficially own 15% or more of the shares of Common Stock then outstanding.
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently (including, without limitation, because (i) such
Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be an Acquiring Person, or (ii) such Person
was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and such Person divests as promptly as practicable a sufficient number
of shares of Common Stock so that such Person would no longer be an Acquiring
Person as defined pursuant to the foregoing provisions of this paragraph, then
such Person shall not be deemed to be or to have become an Acquiring Person for
any purpose of this Agreement. For purposes of the foregoing and all other
provisions of this Agreement, in computing the percentage of the shares of
Common Stock outstanding at any time which are beneficially owned by a Person
and its Affiliates and Associates, the shares of Common Stock then outstanding
shall be deemed to include all shares of Common Stock beneficially owned by such
Person and its Affiliates and Associates as defined in paragraph (g) of this
Section 1, even if such shares are not then outstanding.
(b) "ACT" shall mean the Securities Act of 1933, as amended and in
effect from time to time.
(c) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii).
(d) "ADVERSE PERSON" shall mean any Person declared to be an Adverse
Person by the Board upon determination by the Board that such Person, alone or
together with its Affiliates and Associates, is the Beneficial Owner of an
amount of Common Stock which the Board of Directors determines to be substantial
(which amount shall in no event be less than 10% of the shares of Common Stock
then outstanding) and a determination by the Board of the Company that (i) such
Beneficial Ownership by such Person is intended to cause the Company to
repurchase any of the Common Stock beneficially owned by such Person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term financial gain
under circumstances where the Board determines that the best long-term interests
of the Company and its shareholders would not be served by taking such action or
entering into such transactions or series of transactions at that time or (ii)
such Beneficial Ownership is causing or is reasonably likely to cause a material
adverse impact on the business or prospects of the Company (including, but not
limited to, jeopardization of the status of the Company as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended,
impairment of relationships with the Company's tenants, customers, lenders,
providers of financial and other services, or regulators or impairment of the
Company's ability to maintain its competitive position).
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(e) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(f) "AGREEMENT" shall mean this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
(g) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 hereof (the "Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D or Schedule 13G under the Exchange Act (or any comparable or
successor reports); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (g)) or disposing of any voting
securities of the Company; provided, however, that nothing in this
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paragraph () shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.
(h) "BOARD" means the Board of Directors of the Company.
(i) "BUSINESS DAY" shall mean any day other than a Saturday, 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.
(j) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(k) "COMMON STOCK" shall mean the common stock, par value $0.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(l) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a)(iii).
(m) "COMPANY" shall mean the Person named as the "Company" in the
first paragraph of this Agreement until a successor corporation shall have
become such, or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor corporation or Principal Party.
(n) "CURRENT MARKET PRICE" shall have the meaning set forth in Section
11(d).
(o) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii).
(p) "DISINTERESTED DIRECTOR" shall mean (i) any member of the Board,
while such individual is a member of such Board, who is not an Acquiring Person
or an Adverse Person, or an Affiliate or Associate of an Acquiring Person or an
Adverse Person, or a representative of an Acquiring Person or an Adverse Person
or any such Affiliate or Associate, and was a member of the Board prior to the
date of this Agreement, or (ii) any individual who subsequently becomes a member
of the Board, while such individual is a member of the Board, who is not an
Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person, or a representative of an Acquiring
Person or Adverse Person or any such Affiliate or Associate, if such
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individual's nomination for election or election to the Board is recommended or
approved by a majority of the Disinterested Directors.
(q) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(a).
(r) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth in
Section 11(b).
(s) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(t) "EXCHANGE NUMBER" shall mean one-half of the number of shares of
Common Stock, one-thousandths of a share of Preferred Stock,or shares or other
units of other property for which a Right is exercisable immediately prior to
the time of the action of the Board to exchange the Rights.
(u) "EXPIRATION DATE" shall have the meaning set forth in Section
7(a).
(v) "FINAL EXPIRATION DATE" shall mean the close of business on August
27, 2008.
(w) "FLIP-IN EVENT" shall mean any event described in Section
11(a)(ii)(A) or (B).
(x) "FLIP-IN TRIGGER DATE" shall have the meaning set forth in Section
11(a)(iii).
(y) "FLIP-OVER EVENT" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a).
(z) "NASDAQ" shall mean National Association of Securities Dealers,
Inc. Automated Quotation System.
(aa) "ORIGINAL RIGHTS" shall have the meaning set forth in Section
1(g)(i).
(ab) "PERSON" shall mean any individual, firm, corporation,
partnership, trust, limited liability partnership, limited liability
corporation, or other entity.
(bb) "PREFERRED STOCK" shall mean shares of Series A Preferred Stock,
par value $0.01 per share, of the Company, and, to the extent that there are not
a sufficient number of shares of Series A Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, par value
$0.01 per share, of the
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Company designated for such purpose containing terms substantially similar to
the terms of the Series A Preferred Stock.
(cc) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b).
(dd) "PURCHASE PRICE" shall have the meaning set forth in Section
7(b).
(ee) "RECORD DATE" shall have the meaning set forth in the RECITALS at
the beginning of the Agreement.
(ff) "REDEMPTION DATE" shall have the meaning set forth in Section
23(a).
(gg) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) (Redemption and Termination -- Redemption).
(hh) "RIGHTS" shall have the meaning set forth in the RECITALS at the
beginning of the Agreement.
(ii) "RIGHTS AGENT" shall mean the Person named as the "Rights Agent"
in the first paragraph of this Agreement until a successor Rights Agent shall
have become such pursuant to the applicable provisions hereof and thereafter
"Rights Agent" shall mean such successor Rights Agent. If at any time there is
more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this agreement, "Rights Agent" shall mean and include
each such Person.
(jj) "RIGHTS CERTIFICATES" shall have the meaning set forth in Section
3(a).
(kk) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set
forth in the RECITALS clause at the Beginning of the Agreement.
(ll) Any reference in this Agreement to a specific "SECTION" shall
refer to a Section of this Agreement unless the language or context indicates
otherwise.
(mm) "SPREAD" shall have the meaning set forth in Section 11(a)(iii).
(nn) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) or Section 13(g) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
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(oo) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(pp) "SUBSTITUTION PERIOD" shall have the meaning set forth in Section
11(a)(iii).
(qq) "TRADING DAY" shall have the meaning set forth in Section
11(d)(i).
(rr) "TRIGGERING EVENT" shall mean any Flip-in Event or any Flip-over
Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable 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.
(a) Distribution Date; Rights Certificates. Until the earliest of (i)
the close of business on the tenth day after the Stock Acquisition Date (or, if
the tenth day after the Stock Acquisition Date occurs before the Record Date,
the close of business on the Record Date) or (ii) the close of business on the
tenth Business Day (or such later date as the Board shall determine) after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding or (iii) the close of business on the tenth
Business Day after the Board determines, in accordance with the criteria set
forth in Section 1(d) of this Agreement, that a Person is an Adverse Person (the
earliest of (i), (ii) and (iii) being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company). The Company shall give the Rights Agent prompt written notice of
the Distribution Date. As soon as practicable after the Distribution Date and
receipt of
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written notice of the Distribution Date from the Company, the Rights Agent will,
at the Company's expense, send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more right certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
(b) Summary of Rights; Common Stock Certificates. As promptly as
practicable following the Record Date, the Company will send a copy of a Summary
of Rights, in substantially the form attached hereto as Exhibit C (the "Summary
of Rights"), by first-class, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for the Common Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Legend. Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Sizeler
Property Investors, Inc. (the "Company") and The Bank of New York, as
Rights Agent, dated as of August 6, 1998 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a
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written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person who is, was
or becomes an Acquiring Person or an Adverse Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or
by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date, (ii) the Expiration Date or (iii)
Redemption Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) Form; Date. The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. The Rights Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date, show
the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (such
exercise price per one one-thousandths of a share is referred to as the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Acquiring Person or Adverse Person Legend. Any Rights Certificate
issued pursuant to Section 3(a) or Section 22 that represents Rights
beneficially owned by: (i) an Acquiring Person or Adverse Person or any
Associate or Affiliate of an Acquiring Person or Adverse Person, (ii) a
transferee of an Acquiring Person or Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person or Adverse Person
becomes such, or (iii) a transferee of an Acquiring Person or Adverse Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to holders of equity
interests in such Acquiring Person or Adverse Person or to any Person with whom
such Acquiring Person or Adverse Person has any
9
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Disinterested Directors have determined is
part of a plan, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e), and any Rights Certificate issued pursuant to
Section 6, Section 11 or Section 22 upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or Adverse Person or an Affiliate or Associate of an Acquiring Person
or Adverse Person (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(e) of such Agreement."
The Company shall instruct the Rights Agent in writing of the Rights which
should be so legended and shall supply the Rights Agent with such legended
Rights Certificates.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Signatures. The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights 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 Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such Person was not such an officer.
(b) Registration and Transfer. Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its office or offices designated
as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Procedures. Subject to the provisions of Section 4(b), Section
7(e) and Section 14, at any time after the close of business on the Distribution
Date and at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holders of Rights 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 Rights Certificates.
(b) Issuance of New Rights Certificate. Upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Exercise. Subject to Section 7(e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c),
11
Section 11(a)(iii), Section 23(a) and Section 24(b)) in whole or in part at any
time after the Distribution Date upon surrender of the Rights Certificate, with
the form of election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-thousandths of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable, and an amount
equal to any applicable transfer tax, at or prior to the earliest of (i) the
Final Expiration Date, (ii) the Redemption Date, or (iii) the expiration of the
Rights pursuant to Section 13(d) (the earliest of (i), (ii) and (iii) being
herein referred to as the "Expiration Date").
(b) Purchase Price; Form of Payment. The Purchase Price for each one
one-thousandths of a share of Preferred Stock pursuant to the exercise of a
Right shall initially be $40.00, and shall be subject to adjustment from time to
time as provided in Sections 11 and 13(a). The payment of the Purchase Price
and any applicable transfer tax (as such amount may be reduced pursuant to
Section 11(a)(iii)) shall be made in cash, or by certified check or official
bank check payable to the order of the Company or by delivery of a certificate
or certificates (with appropriate stock powers executed in blank attached
thereto) evidencing a number of shares of Common Stock equal to the then
Purchase Price divided by the closing price (as determined pursuant to Section
11(d)) per share of Common Stock on the Trading Day immediately preceding the
date of such exercise. In the event that the Company is obligated to issue
other securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(c) Action by Rights Agent. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment with respect to each Right so
exercised in compliance with paragraphs (a) and (b) of this Section 7, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of shares of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one two-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14, (iii) after receipt of
12
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14.
(e) Termination of Acquiring Person's or Adverse Person's Rights.
Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Flip-in Event, any Rights beneficially owned by (i) an
Acquiring Person or an Adverse Person or an Associate or Affiliate of an
Acquiring Person or Adverse Person, (ii) a transferee of an Acquiring Person or
Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or (iii) a transferee
of an Acquiring Person or Adverse Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring Person or Adverse Person
or to any Person with whom the Acquiring Person or Adverse Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board, with the concurrence of a majority of
the Disinterested Directors, has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or Adverse Person or any
of their Affiliates, Associates or transferees hereunder. The Rights Agent will
endeavor to comply with the provisions hereof to the extent it has received
instructions from the Company concerning such matters.
(f) Certificate by Registered Holder; Evidence of Identity.
Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to
a registered holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former
13
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
SECTION 8. CANCELLATION OF RIGHTS CERTIFICATES. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Reservation of Stock. The Company covenants and agrees that it
will cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement including Section 11(a)(iii), will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) Listing. If and so long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) Registration. The Company shall use its best efforts to (i) file,
as soon as practicable following the earliest date after the first occurrence of
a Flip-in Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this
14
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect, in each case
with simultaneous written notice to the Rights Agent. In addition, if the
Company shall determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective. Unless the Company has given the Rights Agent prior
written instructions that an identified Right or group of Rights may not be
exercised, the Rights Agent may assume that any right exercised is permitted to
be exercised under applicable law and shall have no liability for acting in
reliance upon such assumption.
(d) Covenant Regarding Stock. The Company will take all such action
as may be necessary to ensure that all one one-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) Transfer Taxes and Charges. The Company will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one two-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one two-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one two-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name
any certificate for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the
15
Rights Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) Certain Adjustments.
(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, that holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
16
(ii) In the event:
(A) (1) any Acquiring Person or Adverse Person or any Associate or
Affiliate of an Acquiring Person or Adverse Person, at any time after the date
of this Agreement, directly or indirectly, shall merge into the Company or
otherwise combine with the Company, and the Company shall be the continuing or
surviving corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, or (2) subject to Section 23,
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person or Adverse Person, unless the event causing that
Person to become an Acquiring Person or Adverse Person is a Flip-over Event or
is an acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price and on
terms determined by the Board, with the concurrence of at least a majority of
the Disinterested Directors and who are not representatives, nominees,
Affiliates or Associates of the Person making such tender or exchange offer,
after receiving advice from one or more investment banking firms selected by the
Board, to be (a) at a price which is fair to shareholders of the Company (taking
into account all factors which the Board, with the concurrence of a majority of
the Disinterested Directors, deems relevant including, without limitation,
prices which could reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value) and (b) otherwise in the
best interests of the Company and its shareholders other than such Acquiring
Person or Adverse Person, its Affiliates and its Associates, or
(B) during such time as there is an Acquiring Person or Adverse
Person, there shall be any reclassification of securities (including any reverse
stock split) or recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries or any other transaction or series
of transactions involving the Company or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section 13(a) apply
(whether or not with or into or otherwise involving an Acquiring Person or
Adverse Person) which has the effect, directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its subsidiaries which is directly or
indirectly beneficially owned by any Acquiring Person or Adverse Person or any
Associate or Affiliate of any Acquiring Person or Adverse Person,
17
then, promptly following the occurrence of any such event described in
(11(a)(ii)(A) or (B) hereof, proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e)) shall thereafter have
the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of a number of one one-
thousandths of a share of Preferred Stock, such number of shares of Common Stock
of the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-over Event, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d)) per share of Common Stock on
the date of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall (A)
determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for the Adjustment
Shares, upon the exercise of a Right and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock, such as the Preferred Stock, which the
Board has deemed to have essentially the same value or economic rights as shares
of Common Stock (such shares of preferred stock being referred to as "Common
Stock Equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the Purchase Price), where
such aggregate value has been determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the later
of (x) the first occurrence of a Flip-in Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Flip-in Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i) the Current
Value over (ii) the Purchase Price. If the Board determines in good faith that
it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days after the Flip-in Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such additional shares
(such period, as extended, is herein called the
18
"Substitution Period"). To the extent that action is to be taken pursuant to the
first and/or third sentences of this Section 11(a)(iii), the Company (1) shall
provide, subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek such shareholder
approval for such authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of each Adjustment Share shall be the Current Market Price per share
of the Common Stock on the Flip-in Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(iv) If the rules of the national securities exchange, registered as
such pursuant to Section 6 of the Exchange Act, or of the national securities
association, registered as such pursuant to Section 15A of the Exchange Act, on
which the Common Stock is principally traded or quoted would prohibit such
exchange or association from listing or continuing to list, or from authorizing
for or continuing quotation and/or transaction reporting through an inter-dealer
quotation system, the Common Stock or other equity securities of the Company if
the Rights were to be exercised for shares of Common Stock in accordance with
subparagraph (ii) of this Section 11(a) because such issuance would nullify,
restrict or disparately reduce the per share voting rights of holders of Common
Stock, the Company shall: (A) determine the Spread, and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) equity securities of the Company, including, without
limitation, Common Stock Equivalents, other than securities which would have the
effect of nullifying, restricting or disparately reducing the per share voting
rights of holders of Common Stock, (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been determined by the
Board based upon the advice of a recognized investment banking firm selected by
the Board; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
calendar days following the Flip-in Trigger Date, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, cash having an aggregate value equal to
the Spread. To the extent that the Company determines that some action need be
taken pursuant to the first sentence of this Section 11(a)(iv), the Company (x)
shall provide, subject to Section 7(e), that such action shall apply uniformly
to all outstanding rights and (y) may suspend the exercisability of the Rights,
but not longer than ninety (90) calendar days after the Flip-in Trigger Date, in
order to decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iv), the value of the
19
Common Stock shall be the Current Market Price per share of the Common Stock on
the Flip-in Trigger Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock on such date.
(b) Purchase Price Adjustment--Preferred Stock. In case the Company
shall fix a record date for the issuance of rights, options or warrants to all
holders of Preferred Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a price per
share of Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the Current Market Price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) Purchase Price Adjustment--Distribution Other Than Preferred
Stock. In case the Company shall fix a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date,
20
less the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Preferred Stock and the denominator of which shall be such Current Market Price
per share of Preferred Stock (as determined pursuant to Section 11(d)(ii)). Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) Current Market Price.
(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "Current Market Price" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the "Current Market Price" per share
of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten (10) consecutive
Trading Days immediately following such date; provided, however, that in the
event that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination or reclassification of
such Common Stock, and the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification shall
not have occurred prior to the commencement of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board. If on
any such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the Board shall
be used. The
21
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or
traded, Current Market Price per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the "Current Market
Price" per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of this Section 11(d) (other
than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) Purchase Price Adjustment Threshold. Anything herein to the
contrary notwithstanding, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other share or one-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years from
the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) Purchase Price Adjustment--Equivalent Shares. If as a result of
an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
22
(g) Post-Adjustment Rights Issuances. All Rights originally issued by
the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the number
of one one-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Preferred Stock Anti-Dilution. Unless the Company shall have
exercised its election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b) and (c),
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one two-
thousandths of a share covered by a Right immediately prior to this adjustment,
by (y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) Adjustment of Number of Rights. The Company may elect on or after
the date of any adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be exercisable
for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10)
calendar days later than the date of the public announcement. If Rights
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 Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
23
(j) Form of Rights Certificates. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a share and the number of one one-
thousandth of a share which were expressed in the initial Rights Certificates
issued hereunder.
(k) Adjustment Below Par or Stated Value. Before taking any action
that would cause an adjustment reducing the Purchase Price below the then par or
stated value, if any, of the number of one one-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable such
number of one one-thousandths of a share of Preferred Stock at such adjusted
Purchase Price.
(l) Adjustment Effective as of Effective Date. In any case in which
this Section 11 shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-thousandths of
a share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Tax Adjustments. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the Current Market Price, (iii) issuance wholly for cash of
shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) Restrictions on Certain Transactions. The Company will not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
24
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of
or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) Additional Restrictions to Protect Benefits of Rights. After the
Distribution Date, the Company will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Common Stock Adjustments. Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in this
Section 11(p) shall not be made successively whenever such a dividend is
declared or paid or such subdivision, combination or consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 and Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall
25
not be deemed to have knowledge of such adjustment unless and until it shall
have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS,
CASH FLOW OR EARNING POWER.
(a) Flip-over Event. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o)) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets, cash flow 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 any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o)), then, and in each such case (except
as may be contemplated by Section 13(d)), proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-thousandths
of a share of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Flip-over Event (or, if a Flip-in Event has
occurred prior to the first occurrence of a Flip-over Event, multiplying the
number of such one one-thousandths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Flip-in Event by the Purchase
Price in effect immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Flip-over Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the Current Market Price (determined pursuant to
Section 11(d)(i)) per share of the Common Stock of such Principal Party on the
date of consummation of such Flip-over Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Flip-over Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall apply
only to such Principal Party following the first occurrence of a Flip-over
Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
26
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Flip-over Event.
(b) Principal Party. "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets, cash flow or earning power transferred pursuant
to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) Conditions to Consummation of Flip-over Event. The Company shall
not consummate any Flip-over Event unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets, cash flow or earnings
power mentioned in paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
27
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all respects
with the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations or sales or other transfers (including the types of transactions
described in clauses (x), (y) and (z) of the first sentence of Section 13(a),
except that, in lieu of "Company", substitute the Person which is then the
successor to the obligations and duties of the Company under this Agreement).
In the event that a Flip-over Event shall occur at any time after the occurrence
of a Flip-over Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Certain Exceptions. Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction described in
clauses (x) and (y) of the first sentence of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock which complies with the provisions of Section 11(a)(ii)
hereof (or a wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transaction is not less than the
price per share of Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such tender offer or exchange offer and
(iii) the form of consideration being offered to the remaining holders of shares
of Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
(e) Certain Protections for Rights Agent. In no event shall the
Rights Agent have any liability in respect of any such Principal Party
transactions, including, without limitation, the propriety thereof. The Rights
Agent may rely and be fully protected in relying upon a certificate of the
Company stating that the provisions of this Section 13 have been fulfilled.
Notwithstanding anything in this Agreement to the contrary, the prior written
consent of the Rights Agent must be obtained in connection with any supplemental
agreement which alters the rights or duties of the Rights Agent.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) Fractional Rights. The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p), or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights
28
would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board shall be used.
(b) Fractional Shares of Preferred Stock. The Company shall not be
required to issue fractions of shares of Preferred Stock (other than fractions
which are integral multiples of one one-thousandths of a share of Preferred
Stock) upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandths of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral multiples of one one-
thousandth of a share of Preferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-thousandth of a share of
Preferred Stock shall be one one-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii)) for the Trading
Day immediately prior to the date of such exercise.
(c) Fractional Shares of Common Stock. Following the occurrence of a
Triggering Event, the Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value
of one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise.
(d) Waiver of Fractional Rights and Shares. The holder of a Right by
the acceptance of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
29
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right
by accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e),
shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of
30
such obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one one-
thousandths of a share of Preferred Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in Section 24), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) Compensation. The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim (whether asserted by the Company, any
holder of a Rights Certificate, or any other Person) of liability in the
premises.
The provisions of this Section 18(a) shall survive the expiration of
the Rights and the termination of this Agreement.
(b) Reliance. The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper Person or Persons, and, where necessary, to be
verified or acknowledged.
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Successor. 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 all or substantially all the corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) Prior Countersignatures. In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
any duties and obligations expressly imposed by this Agreement upon the
following terms and conditions, and no implied duties or obligations shall be
read into this Agreement against the Rights Agent, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) Legal Counsel. The Rights Agent may consult with legal counsel of
its selection (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Certification by Company. Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person or Adverse Person and the determination of "current
market price") be proved or established by the
32
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
the Chairman of the Board and Chief Executive Officer, President, any Vice
President, the Treasurer, any Assistant 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) Liability for Certain Conduct. The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith or willful misconduct.
(d) Non-Liability for Statements of Fact and Recitals Herein. 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 Rights Certificates or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) Non-Responsibility for Certain Matters. The Rights Agent shall
not be under any responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights 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 Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or Section 13 or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
nonassessable, nor shall the Rights Agent be responsible for the legality of the
terms hereof in its capacity as an administrative agent.
(f) Further Assurances by Company. 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) Instructions for Company Officers. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from the Chairman of the Board and Chief Executive
Officer, President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant
33
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 and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) Dealing in Rights; Other Transactions with Company. The Rights
Agent and any shareholder, director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not 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) Use of Agents; Reasonable Care by Agents. 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,
however, reasonable care was exercised in the selection thereof.
(j) Expenditures. 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) Consultation with Company Concerning Surrendered Rights
Certificates. If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
34
(l) Notice to Rights Agent. The Company agrees to give the Rights
Agent prompt written notice of any event or ownership which would prohibit the
exercise or transfer of the Rights Certificates.
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 thirty (30) days' notice in writing mailed to the Company. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the Rights Agent or any registered holder
of any Rights Certificate may apply, at the expense of the Company, 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 corporation organized and doing business and in good standing under
the laws of the United States or of any state of the United States, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, 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 RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company prior to the
35
Distribution Date, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, or to the extent that, appropriate adjustments
shall have otherwise been made in lieu of the issuance of a Rights Certificate.
SECTION 23. REDEMPTION AND TERMINATION.
(a) Redemption. The Company may, at its option, at any time prior to
the earlier of (i) the Close of Business on the tenth Business Day following the
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the tenth Business Day
following the Record Date), or (ii) the Final Expiration Date, redeem (the date
of such redemption being referred to herein as the "Redemption Date") all but
not less than all of the then outstanding Rights at a redemption price of $0.001
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that any redemption after the Stock Acquisition Date must be
authorized by the Board (and, until the expiration of the 180-day period
referred to in Section 23(c) hereof, with the concurrence of a majority of
Disinterested Directors); provided further, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the right
of redemption but prior to any Triggering Event, (i) a Person who is an
Acquiring Person shall have transferred or otherwise disposed of a number of
shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of less than 15% of the outstanding shares of
Common Stock, and (ii) there are not other Persons, immediately following the
occurrence of the event described in clauses (i) and (ii), who are Acquiring
Persons, then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Flip-in Event until such time as the Company's
right of redemption hereunder has expired. The redemption of the Rights by the
Company may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion or the Disinterested Directors in
their sole discretion, as applicable, may establish. The Company may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the
Current Market Price of the Common Stock at the time of redemption)or any other
form of consideration deemed appropriate by the Board of the Disinterested
Directors, as applicable.
(b) Effect of Redemption; Procedure. Immediately upon the action of
the Company ordering the redemption of the Rights pursuant to Section 23(a) and
without any further action and without any notice, the right to exercise the
Rights will terminate and
36
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the Redemption Date, the
Company shall (i) give notice of such redemption to the Rights Agent, (ii) give
public notice of such redemption; provided,however, that the failure to give, or
any defect in such notice shall not affect the validity of such redemption, and
(iii) mail notice of such redemption to the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Amounts payable shall be rounded
down to the nearest $0.01.
(c) Limited Deferred Redemption. Notwithstanding the provisions of
Section 23(a) hereof, in the event that a majority of the Board is elected by
written consent of shareholders, or is comprised of persons elected at a meeting
or meetings of shareholders who were not nominated by the Board in office
immediately prior to the meeting or meetings at which such majority was elected,
then for a period of one hundred eighty (180) days following the effectiveness
of such election the Rights shall not be redeemed if such redemption is
reasonably likely to have the purpose or effect of allowing any Person to become
an Acquiring Person or otherwise facilitating the occurrence of a Triggering
Event or a transaction with an Acquiring Person.
SECTION 24. EXCHANGE.
(a) Right to Exchange. The Company may, at its option, at any time
and from time to time after the first occurrence of a flip-in Event, exchange
all or part of the then outstanding and exercisable Rights (other than Rights
which have become void as provided in Section 7(e)) for the Exchange Number of
shares of Common Stock, shares or units of Preferred Stock which the Board has
determined to be a Common Stock Equivalent, units of other property or any
combination thereof as determined by the Board. Notwithstanding the foregoing,
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Person (other than the Company, any such Subsidiary or any
entity holding shares of Common Stock for or pursuant to any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.
The exchange of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may
establish.
(b) Effect of Exchange; Procedure. Immediately upon the action of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock, Common Stock
Equivalents or units of other property equal to the number
37
of such Rights held by such holder multiplied by the Exchange Number. Promptly
after the action of the Company ordering the exchange of the Rights, the Company
shall (i) file evidence of such action with the Rights Agent, (ii) give public
notice of such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange, and (iii)
mail notice of such exchange to the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void as provided in Section 7(e)) held by each holder of
Rights.
(c) Common Stock Equivalents. In any exchange pursuant to this
Section 24, the Company, at its option, may substitute Common Stock Equivalents
for Common Stock exchangeable for Rights, at the initial rate of one share of
Common Stock Equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Common Stock
pursuant to the Company's Certificate of Incorporation, so that the share of
Common Stock Equivalent delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the number of shares
of Common Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purpose other
than upon exercise of the Rights is not sufficient to permit any exchange of
Rights in accordance with this Section 24, the Company may, at its option, take
all such action as may be necessary to authorize additional shares of Common
Stock for issuance upon such exchange.
(e) Fractional Shares. Upon the action of the Company ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24, the Company
shall not be required to issue fractions of shares or to distribute certificates
which evidence fractional shares. In lieu of such fractional shares, the
Company may pay to the registered holders of the Rights Certificates with regard
to which such fractional shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of one share of Common
Stock. For purposes of this Section 24, the current market value of one share
of Common Stock shall be the closing price of one share of Common Stock (as
determined pursuant to Section 11(d)(i)) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24, and the value of any Common
Stock Equivalent shall be deemed to have the same current market value as the
Common Stock on such date.
SECTION 25. NOTICES
(a) Addresses and Notice Method for all Notices. Notices or demands
authorized by this Agreement to be given or made by the Rights Agent or by the
38
holder of any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by telecopier (with receipt confirmed) or first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Sizeler Property Investors, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxx, XX 00000
Attention: Chairman of the Board or President
Telecopier: (000) 000-0000
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by telecopier (with receipt confirmed) or first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer Administration
Telecopier: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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.
(b) Notice of Certain Distributions, etc. In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company nd
other than a distribution in payment of the redemption price upon termination by
the Board of the Shareholder Rights Plan of the Company adopted April 28, 1989),
or (ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), 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 transaction or a series of related transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies
39
with Section 11(o)), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to each holder
of a Rights Certificate and to the Rights Agent, to the extent feasible and in
accordance with this Section 25, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock, whichever shall be the earlier.
(c) Other Transactions. In case any event set forth in Section
11(a)(ii) shall occur, then in such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate and to the
Rights Agent, to the extent feasible and in accordance with this Section 25, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii), and (ii)
all references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock; provided, however, that any supplement or
amendment of this Agreement after the Stock Acquisition Date or after the date
on which the Board determines, in accordance with the criteria set forth in
Section 1(d) of this Agreement, that a Person is an Adverse Person, must be
approved by a majority of the Disinterested Directors. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Adverse
Person or an Affiliate or Associate of such Person). Notwithstanding the
foregoing provisions of this Section 26, this Agreement may not be supplemented
or amended:
to lengthen, pursuant to clause (iii) of the preceding sentence, (A) a
time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable, or
40
(B) any other time period unless such lengthening is for the purpose
of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights, or
unless any such supplement or amendment after the Stock Acquisition
Date or the date on which the Board has determined, in accordance with
the criteria set forth in Section 1(d) of this Agreement, that a
Person is an Adverse Person, has been approved by a majority of the
Disinterested Directors.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of one one-
thousandths of a share of Preferred Stock for which a Right is exercisable;
provided, however, that at any time prior to (i) the existence of an Acquiring
Person or (ii) the date that a tender or exchange offer by any person (other
than the Company, any Subsidiary of the company,any employee benefit plan of the
Company or any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding or (iii) the Board has determined, in
accordance with the criteria set forth in Section 1(d) of this Agreement, that a
Person is an Adverse Person, the Board may amend this Agreement to increase the
Purchase Price or extend the Final Expiration Date. Notwithstanding the
foregoing provisions of this Section 26, following the election of a majority of
the Board under circumstances set forth in Section 23(c), the approval of a
majority of Disinterested Directors is not required after the expiration of the
180-day period referred to in Section 23(c). Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 26 which alters the Rights Agent's rights or
duties.
SECTION 27. 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 28. DETERMINATIONS AND ACTIONS BY THE BOARD, DISINTERESTED
DIRECTORS, ETC. For all purposes of this Agreement and subject, however, to the
last sentence of Section 1(a), any calculation of the number of shares of Common
Stock
41
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically provided for herein, the
concurrence of the Disinterested Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to such Board (with, where specifically provided for
herein, the concurrence of the Disinterested Directors) or to the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board (with, where specifically provided for herein, the concurrence
of the Disinterested Directors) in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board or the Disinterested Directors to
any liability to the holders of the Rights.
SECTION 29. 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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth day following the date of
such determination by the Board. Without limiting the foregoing, if any
provision requiring a majority of the Board to be Disinterested Directors or
requiring action to be taken by or with the concurrence of a majority of
Disinterested Directors is held by any court of competent jurisdiction to be
invalid, void or unenforceable and all appeals from that determination have been
exhausted or waived, the determination as to whether any such action shall be
taken or withheld shall then be made by the Board in accordance with applicable
law and the Company's Certificate of Incorporation and Bylaws.
42
SECTION 31. GOVERNING LAW. This Agreement, each Right and each
Rights 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 to be performed entirely within such State, provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: SIZELER PROPERTY INVESTORS, INC.
By: By:
-------------------------- ---------------------------------
Xxxxxx X. Xxxxxxx, Xx.,
Vice Chairman and President
Attest: THE BANK OF NEW YORK, as Rights Agent
By: By:
-------------------------- ---------------------------------
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