EXHIBIT 4.1
EQUIDYNE CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
--------------
RIGHTS AGREEMENT
Dated as of January 22, 2001
RIGHTS AGREEMENT
AGREEMENT, dated as of January 22, 2001, by and between EQUIDYNE
CORPORATION, a Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER
& TRUST COMPANY, a New York corporation (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend distribution of one preferred share purchase right (a "Right") for
each share of Common Stock (as hereinafter defined) of the Company outstanding
at the close of business on February 14, 2001 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a share of Preferred
Stock (as such term is hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right (as such number may hereinafter be adjusted pursuant to
the provisions of Section 11(i) hereof) with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
WHEREAS, the Board of Directors has approved and authorized the appointment
of the Rights Agent, and the Rights Agent desires to accept such appointment.
NOW, THEREFORE, 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 (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall not include the Company,
any Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, any
entity holding shares of Common Stock for or pursuant to the terms of any such
plan, or any trustee, administrator or fiduciary of such a plan. Notwithstanding
the foregoing,
(i) no Person who or which, at the close of business on the date
hereof, shall be the Beneficial Owner of 15% or more of the shares of
Common Stock of the Company then outstanding shall be deemed an
"Acquiring Person"; provided, however, that, subject to clause (ii)
-------- -------
below, if a Person is, at the close of business on the date hereof,
the Beneficial Owner of 15% or more of the shares of Common Stock of
the Company then outstanding and shall thereafter become the
Beneficial Owner of additional shares of Common Stock of the Company
at any time that the Person is or thereby becomes the Beneficial Owner
of 15% or more of the shares of Common Stock of the Company then
outstanding (other than shares acquired solely as a result of
corporate action of the Company not caused, directly or indirectly, by
such Person), then such Person shall be deemed to be an "Acquiring
Person"; and
(ii) no Person shall become an "Acquiring Person" solely as a
result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to
15% or more of the shares of Common Stock of the Company then
outstanding; provided, however, that if a Person would, but for the
-------- -------
provisions of this clause (ii), become an Acquiring Person by reason
of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock of the Company at any time that the
Person is or thereby becomes the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding (not as a
result of any action or transaction contemplated in this clause (ii)
or in clause (iii) below), then such Person shall be deemed to be an
"Acquiring Person"; and
(iii) no Person shall become an "Acquiring Person" solely as a
result of an action or transaction or series of related actions or
transactions approved by the Board of Directors of the Company before
such Person would otherwise have become an "Acquiring Person";
provided, however, that if any Person which, but for the foregoing
-------- -------
provisions of this clause (iii), would have become an "Acquiring
Person" shall thereafter acquire additional shares of Common Stock
(not as a result of any action or transaction contemplated in clause
(ii) above or in this clause (iii)), then such person shall be deemed
to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this subsection (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock of the Company so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this subsection (a), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) 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 beneficially owns, within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on
the date of this Agreement or any successor rule;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
2
any agreement, arrangement or understanding (whether or not in
writing) (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be
-------- -------
deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed
-------- -------
the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given to such Person in response
to a public proxy solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the provisions of Section 1(c)(ii)(B) hereof) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the City of New York, New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M. New York time, on the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the common stock, par value $.10 per share, of the Company. "Common Stock" when
used with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person other than an
individual, the Person or Persons other than an individual which ultimately
control such first-mentioned Person.
(g) "Company" shall have the meaning set forth in the preamble hereto.
(h) "Current Per Share Market Price" shall have the meaning set forth
in Section 11(d)(i) hereof.
3
(i) "Depositary Agent" shall have the meaning set forth in Section
14(b) hereof. The entity acting as Rights Agent may also act as Depositary
Agent.
(j) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(k) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(l) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
(m) "Preferred Stock" shall mean a series of the Company's Series C
Preferred Stock, $.01 par value, having the relative rights, preferences,
limitations and restrictions set forth in the form of Certificate of Designation
of Equidyne Corporation, attached hereto as Exhibit A, and to the extent that
there are not a sufficient number of shares of Series C Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
preferred stock of the Company designed for such purpose containing terms
substantially similar to the terms of the Series C Preferred Stock, or as
otherwise provided in Section 9(a)(iii) hereof.
(n) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(o) "Record Date" shall have the meaning set forth in the recital
hereto.
(p) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(q) "Redemption Price" shall have the meaning set forth in Section
23(b) hereof.
(r) "Right" shall have the meaning set forth in the recital hereto.
(s) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof, and shall be substantially in the form attached to this Agreement
as Exhibit B.
(t) "Rights Agent" shall have the meaning set forth in the preamble
hereto and includes a Co-Rights Agent or Co-Rights Agents as provided in Section
2 hereto.
(u) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(v) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(w) "Summary of Rights" shall have the meaning set forth in Section
3(c) hereof.
4
(x) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of shares of the Common Stock of the Company) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time act as Co-Rights Agent or appoint
such Co-Rights Agents as it may deem necessary or desirable. Any actions which
may be taken by and any deliveries which are to be made to the Rights Agent
pursuant to the terms of this Agreement may be taken by and may be delivered to
any such Co-Rights Agents. To the extent that any Co-Rights Agent takes any
action pursuant to this Agreement, such Co-Rights Agent shall be entitled to all
of the rights and protections of, and subject to all of the applicable duties
and obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
---------------------------
close of business on the tenth Business Day after the Shares Acquisition Date
(or, if the Shares Acquisition Date shall have occurred prior to the Record
Date, the close of business on the tenth Business Day after the Record Date) or
(ii) the close of business on the tenth Business Day after the date of the
commencement of a tender or exchange offer the consummation of which would
result in any Person becoming an Acquiring Person (or such later date as the
Board of Directors may determine by resolution adopted prior to the Shares
Acquisition Date) (such date being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced by the certificates for shares of
Common Stock of the Company and not by separate Right Certificates, and (y) the
Rights will be transferable only in connection with, and will automatically be
transferred by, a transfer of the associated shares of Common Stock of the
Company. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of shares of
Common Stock of the Company as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate in the form described in Section 4 hereof (a "Right Certificate"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. On and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) Rights shall be issued in respect of all shares of Common Stock of
the Company issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, and
certificates evidencing such shares shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
"This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement, dated as of January 22,
2001 (the "Rights Agreement"), between Equidyne Corporation and American
Stock Transfer & Trust Company, the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Equidyne Corporation. 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.
5
Equidyne Corporation will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. As described in the Rights Agreement, Rights beneficially owned
by an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement) and any Transferee
shall become null and void."
In the event that the Company shall purchase or acquire any shares of Common
Stock of the Company after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date any Rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
shares of Common Stock which are no longer outstanding.
(c) The Company will make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights") to each holder of
Rights who may so request from time to time prior to the Expiration Date.
Section 4. Form of Right Certificates. (a) The Right Certificates (and the
--------------------------
forms of election to purchase shares of Preferred Stock and of assignment to be
printed on the reverse thereof) 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.
(b) Subject to the provisions of Section 7, Section 11 and Section 22
hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one hundredths of a share of Preferred Stock as shall be set
forth therein at the Purchase Price (as defined in Section 7(b)), but the number
of such one one hundredths of a share of Preferred Stock and the Purchase Price
shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
President, or any of its Vice Presidents, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Corporate Secretary or an Assistant Corporate
Secretary, or the Treasurer or an Assistant Treasurer, of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually or
by facsimile signature countersigned by the Rights Agent and shall not be valid
for any purpose unless countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificate nevertheless may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
6
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its shareholder services office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
---------------------------------------------------------------------
Subject to the provisions of Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the shareholder services office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any such action whatsoever with respect
to the transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliate or Associate thereof as the Company shall
reasonably request. Thereupon, the Rights Agent shall, subject to Sections 7(e)
and 14 hereof, countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Subject to Section 7(e) hereof, at any time after the Distribution Date, and
at or prior to the earlier of (i) the close of business on January 21, 2011 (the
"Final Expiration Date"), or (ii) the time at which the Rights are redeemed or
exchanged as provided in Section 23 hereof (the "Redemption Date"), the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein, including without limitation any
restriction on exercisability set forth in or resulting from Xxxxxxx 0, Xxxxxxx
00(x)(xxx), Section 14 and Section 20(j) hereof) in whole or in part upon
surrender of the Right Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
7
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-hundredth
of a share of Preferred Stock as to which the Rights are exercised.
(b) The purchase price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right (the "Purchase Price") shall
initially be $40.00, shall be subject to adjustment from time to time as
provided in Section 11 and Section 13 hereof and shall be payable in accordance
with subsection (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the shares of Preferred Stock
(including fractions thereof) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent for the shares of
Preferred Stock certificates for the number of whole shares of Preferred Stock
to be purchased and the Company hereby irrevocably authorizes such transfer
agent to comply with all such requests, or (B) requisition from the Depositary
Agent depositary receipts representing such number of one one-hundredths 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 hereby directs the
Depositary Agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Right Certificate. The payment of the Purchase Price shall be made in
cash or by certified bank check or bank draft payable to the order of the
Company or Rights Agent. The provisions of this subsection (c) are subject to
the provisions of subsections (e) and (f) of this Section 7 and the provisions
of Section 20(j) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the date upon which any Person shall become an Acquiring Person, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
8
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become and be null and void without any further action and
no holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. Each of the
Company and the Rights Agent shall use all reasonable efforts to ensure that (x)
no Right Certificate shall be issued pursuant to Section 3 hereof that
represents any such Right, (y) no Right Certificate shall be issued at any time
upon the transfer of any Rights to or from an Acquiring Person or any Associate
or Affiliate thereof or to or from any nominee of such Acquiring Person,
Associate or Affiliate and (z) any Right Certificate delivered to the Rights
Agent for such a transfer shall be canceled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the exercise of any Rights unless the registered holder
thereof shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Rights Agent or the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates in accordance with Rule
17Ad-7 under the Exchange Act, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. (a) 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 the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) The Company shall use all reasonable efforts, as soon as
practicable following the Shares Acquisition Date, to obtain such regulatory
approvals and take such other action as may be required for it to issue and/or
sell securities purchasable upon the exercise of the Right.
(c) Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable pursuant to Section 7 hereof or pursuant to
the provisions contemplated by Section 11(a)(ii) hereof, and the Company shall
have no obligations thereunder, (i) unless and until any regulatory approvals or
clearances required for the issuance and/or sale of securities upon such
exercise have been obtained, (ii) if the exercise thereof, or the issuance
9
and/or sale of the securities to be purchased upon such exercise, would violate
or contravene any applicable law, regulation or administrative or judicial order
or (iii) in any jurisdiction if any requisite filings under any applicable
securities law shall not have been made or become effective in such
jurisdiction.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of Rights shall be duly and
validly authorized and issued and, if equity securities, fully paid and
nonassessable.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for securities in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
transfer or exercise or to issue or to deliver any certificates or depositary
receipts for securities upon the exercise of any Rights until any such tax shall
have been paid by the holder of such Right Certificate or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Issuance Date. Each person in whose name any
-----------------------------
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Preferred Stock represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made (or if such day is not a Business Day, the next succeeding
Business Day).
Section 11. Adjustment of Purchase Price, Amount and Type of Securities or
--------------------------------------------------------------
Number of Rights. The Purchase Price, the amount and type of securities covered
----------------
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement and prior to the Shares Acquisition Date (A) declare a dividend
on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding shares of Preferred
Stock into a smaller number of shares of Preferred Stock 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), the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
--------
10
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to the provisions of Section 7(e), Section 9,
Section 14 and Section 20(j) hereof, in the event any Person shall become an
Acquiring Person, proper provision shall be made so that each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof at a price equal to the Purchase Price, (A) in lieu of shares
of Preferred Stock that number of shares of Common Stock of the Company having
an aggregate Current Per Share Market Price on the Shares Acquisition Date equal
to twice the Purchase Price or (B) at the election of the Company, that number
of shares of Preferred Stock equal to the number of shares of Common Stock
determined in accordance with clause (A) multiplied by one one-hundredth.
(iii) In the event that (x) there shall not be sufficient shares
of Common Stock of the Company and/or Preferred Stock or a combination thereof
authorized but unissued, or there shall not have been received any regulatory
approval required, to permit the exercise in full of the Rights, and the
performance by the Company of its obligations thereunder, in accordance with the
foregoing subparagraph (ii), or (y) the issuance of Common Stock of the Company
and/or Preferred Stock upon such exercise shall not then be permitted under the
Company's Certificate of Incorporation or any applicable law or administrative
or judicial regulation or order, the Company may, at its option, with respect to
some of or all of the Rights (as hereinafter provided), make adequate provision
to substitute, upon exercise of each such Right but subject to Section 9 hereof,
(1) cash, (2) a reduction in the Purchase Price, (3) equity securities of the
Company and/or its Subsidiaries, (4) debt securities of the Company and/or its
Subsidiaries, (5) other assets or securities, or (6) any combination of the
foregoing, having an aggregate value equal to the aggregate Current Per Share
Market Price on the Shares Acquisition Date of the securities for which each
such Right would otherwise be exercisable pursuant to Section 11(a)(ii) hereof
(such aggregate value to be determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company, which determination shall be
described in a statement filed with the Rights Agent). To the extent that the
Board of Directors of the Company determines that some action need be taken
pursuant to the first sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights (or to Rights pro rata or such other reasonable method
of allocation as shall be determined by the Board of Directors of the Company,
to the extent that such action applies to less than all the Rights), and (y) may
suspend the exercisability of the Rights in order to seek any authorization of
additional shares, to take any action to obtain any required regulatory
approval, to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof and/or to take any other
action deemed by the Company to be legally required in order to effect such
distribution. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of shares of Preferred Stock prior to
the Shares Acquisition Date entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase shares of
11
Preferred Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("equivalent preferred shares")) or securities
convertible into shares of Preferred Stock or equivalent preferred shares at a
price per share of Preferred Stock or equivalent preferred share (or having a
conversion price per share, if a security convertible into shares of Preferred
Stock or equivalent preferred shares) less than the then Current Per Share
Market Price of the 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 shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Per Share Market Price and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). 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, options 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. In case such subscription price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of the Preferred Stock prior to the Shares
Acquisition Date (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then Current Per
Share Market Price of the Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and the denominator of which shall be such Current Per Share
Market Price of a share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "Current
Per Share Market Price" of any security (a "Security") for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
--------
12
however, that in the event that the Current Per Share Market Price of the
-------
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share Market
Price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the American Stock Exchange or,
if the Security is not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or such other system
then in use, or, if on any such date the Security is 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 Security selected by the Board
of Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the Current
Per Share Market Price of shares of the Preferred Stock on any date shall be
determined in accordance with the method set forth in Section 11(d)(i) hereof.
If the shares of Preferred Stock are not publicly traded, the Current Per Share
Market Price of the shares of Preferred Stock shall be conclusively deemed to be
the Current Per Share Market Price of the shares of Common Stock of the Company
as determined pursuant to Section 11(d)(i) hereof (appropriately adjusted to
reflect any stock split, stock dividend, reclassification or similar transaction
occurring after the Distribution Date), multiplied by one-hundred. If neither
the Common Stock nor the Preferred Stock are publicly held or so listed or
traded, Current Per Share Market Price shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
-------- -------
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-millionth of a share of
Preferred Stock or one ten-thousandth of any other share or security, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
13
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13 hereof, the holder of any Right thereafter exercised shall become
entitled to receive any Securities or assets other than shares of Preferred
Stock, the provisions of this Agreement with respect to the Preferred Stock
shall apply as appropriate to any such other Securities or assets in order to
fully realize the benefits intended to be conferred by Section 11(a) and/or
Section 13 hereof.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-hundredths of a share of Preferred Stock (calculated to the nearest one
one-millionth of a share of Preferred Stock) obtained by (i) multiplying (x) the
number of one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one-hundredths 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 Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed, subject to the
provisions of Section 7(e) hereof, to holders of record of Right Certificates on
such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
14
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one-hundredths of a
share of Preferred Stock which were expressed in the initial Right Certificates
issued hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Stock and other securities, if any, issuable upon such exercise
over and above the Preferred Stock and other securities, 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 securities upon the occurrence of the event requiring such
adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, 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, dividends on shares of Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such shareholders.
(m) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on its shares of Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of its Common Stock (by
reclassification or otherwise than by payment of dividends in its Common Stock)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (x) the Purchase Price in effect after such event upon proper
exercise of each Right shall be determined by multiplying the Purchase Price in
effect immediately prior to such event by a fraction, the numerator of which is
the number of such shares of Common Stock outstanding immediately before such
event and the denominator of which is the number of such shares of Common Stock
outstanding immediately after such event, and (y) each share of Common Stock of
the Company outstanding immediately after such event shall have issued with
respect to it that number of Rights which each such share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(m) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 hereof, take (or permit any
15
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.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall promptly (i) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(ii) file with the Rights Agent and with each transfer agent for the Common
Stock of the Company or the Preferred Stock a copy of such certificate and (iii)
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power or Certain Other Transactions. In the event that, following the Shares
-----------------------------------
Acquisition Date, directly or indirectly (i) 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(n) hereof), (ii) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n) hereof) shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the shares of Common Stock of the Company shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person, or to two or more Persons which are affiliated or otherwise acting
in concert, other than the Company or one or more of its wholly-owned
Subsidiaries (other than a Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), then, and in each such case, proper
provision shall be made so that (w) each holder of a Right shall thereafter have
the right to receive, upon the exercise thereof at a price equal to the Purchase
Price, that number of shares of Common Stock of such other Person (including the
Company as successor thereto or as the surviving corporation) having an
aggregate Current Per Share Market Price on the date of consummation of such
transaction equal to twice the Purchase Price, (x) the issuer of such shares of
Common Stock shall thereafter be liable for, and shall assume, by virtue of such
transaction, all the obligations and duties of the Company pursuant to this
Agreement, (y) the term "Company" shall thereafter be deemed to refer to such
issuer, and (z) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of Common Stock
thereafter deliverable upon the exercise of the Rights. The Company shall not
enter into or permit to occur any such transaction unless prior thereto (a) the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing and (b) the issuance of shares of Common
Stock of such issuer upon exercise of Rights (as they shall have been modified
pursuant to the immediately preceding sentence) shall have been approved, to the
extent required, by all regulatory authorities having jurisdiction over such
issuance, and all other actions necessary in order to permit in full, upon
exercise of Rights, the issuance of such shares of Common Stock (including,
without limitation, the reservation of sufficient such shares of Common Stock to
16
enable all outstanding Rights to be exercised in full) shall have been
completed. The Company shall not enter into or permit to occur any transaction
of the kind referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities outstanding or any
agreements or arrangements which would eliminate or materially diminish the
benefits intended to be afforded by the Rights, including the benefits intended
to be conferred by this Section 13 upon consummation of such transaction. The
provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, sales and other transactions referred to in this Section 13.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
---------------------------------------
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the American Stock Exchange or, if the Rights are not listed or
admitted to trading on the American 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 of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of a share of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth 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-hundredth of a
share of Preferred Stock). Fractions of a share of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary agent selected by it
(the "Depositary Agent"), provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences, and the qualifications, limitations and restrictions, to which they
are entitled or subject to as beneficial owners of the Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a share
of Preferred Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
17
a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional securities
upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates; and any registered holder of any Right Certificate, without the
consent of the Rights Agent or of the holder of any other Right Certificate,
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of shares of Common Stock of the Company;
(b) after the Distribution Date, the Right 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;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common 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) hereof, shall 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
18
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
-------------------------------------------------
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of a share of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as expressly
provided herein), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
---------------------------
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for a share of Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a)
---------------------------------------------------------
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
19
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
----------------------
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer, the
Secretary, or any Assistant Treasurer or Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, and all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
20
be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11 or 13 hereof, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Common Stock of the Company or Preferred Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer, the Secretary, or any Assistant Treasurer or
Assistant Secretary 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 by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
Securities of the Company or become pecuniarily interested in any transaction in
which the Company 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) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) 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 forthwith bring such surrender to the attention
of the Company and shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock of the Company or Preferred Stock by registered or certified
21
mail, and to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock of the Company or
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (i) a corporation organized and doing business under the laws of the
United States or the State of New York or the State of Delaware (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Delaware or the State of New
York), in good standing, having an office in the State of Delaware or the State
of New York, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million, or (ii) an affiliate of a
corporation described in clause (i) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock of the Company or Preferred Stock,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock of the Company following the Distribution Date
and prior to the Redemption Date or the Final Expiration Date, the Company
shall, with respect to shares of Common Stock of the Company so issued or sold
pursuant to the exercise of stock options or warrants outstanding prior to the
Distribution Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and outstanding prior to the Distribution
Date, issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
22
Section 23. Redemption or Exchange. (a) The Rights may be redeemed or
----------------------
exchanged by action of the Board of Directors pursuant to this Section 23 and
shall not be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the close of business on the tenth Business Day after the Shares
Acquisition Date (or, if the Shares Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth Business Day after the
Record Date), elect to redeem all, but not less than all, the then outstanding
Rights at a redemption price of $0.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). In the event that the aggregate redemption price payable to
any holder of Rights for all Rights held by such holder shall not be evenly
divisible by $.01, the fraction of one cent otherwise payable to such holder
shall be increased to one cent.
(c) The Board of Directors of the Company may, at its option but
subject to receipt of any required regulatory approvals, at any time after the
Shares Acquisition Date and prior to such time an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock of
the Company, elect to exchange all, but not less than all, the then outstanding
Rights (other than Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for (i) shares of Common Stock of the Company at an
exchange ratio of one share of Common Stock of the Company per Right,
appropriately adjusted in order to protect the interests of holders of Rights
generally in the event that after the Distribution Date any issuance or
distribution of securities, cash or assets in respect of, in lieu of or in
exchange for a share of Common Stock of the Company and/or Preferred Stock
(whether by dividend, in a reclassification or recapitalization, or otherwise,
including any such transaction involving a merger or consolidation), shall have
occurred; provided, however, that in the event that insufficient shares of
Common Stock of the Company are authorized but unissued, or otherwise available
for issuance, to permit in full the exchange provided hereby, then each Right
shall be exchanged for (x) that fraction of a share of Common Stock of the
Company, the numerator of which shall be the total number of shares of Common
Stock of the Company authorized but unissued or otherwise available for
issuance, and the denominator of which shall be the aggregate number of such
shares of Common Stock of the Company which would have been issued pursuant to
this subsection (c)(i) had such shares of Common Stock been available for
issuance, plus (y) that fraction of a share of Preferred Stock, also
appropriately adjusted as provided herein, the numerator of which shall be one
minus the fraction of a share of Common Stock of the Company to be so issued and
the denominator of which shall be one hundred, or (ii) cash, debt or equity
securities of the Company and/or a Subsidiary thereof or other assets or any
combination of the foregoing having an aggregate value (when paid) equal to the
Current Per Share Market Price of one share of Common Stock of the Company at
the Shares Acquisition Date.
(d) Immediately upon the action of the Board of Directors of the
Company electing to redeem or exchange the Rights pursuant to subsection (b) or
(c) of this Section 23, and without any further action and without any notice,
the right to exercise the Rights will terminate and each Right will thereafter
23
represent only the right to receive the Redemption Price or the securities or
assets referred to in subsection (c) of this Section 23, as the case may be.
Within 10 days after such action of the Board of Directors electing to redeem or
exchange the Rights pursuant to subsection (b) or (c) of this Section 23, the
Company shall give notice thereof to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at their
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption or exchange will state the method by which the
payment of the Redemption Price or the exchange will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than that specifically set
forth in this Section 23, other than in connection with the acquisition or
purchase of shares of Common Stock of the Company prior to the Distribution
Date. Section 24. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
shares of its Preferred Stock or to make any other distribution to the holders
of shares of its Preferred Stock (other than a regular quarterly cash dividend),
(ii) to offer to the holders of shares of its 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, (iii)
to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (iv) to effect any transaction set forth in Section 13 hereof,
(v) to affect the liquidation, dissolution or winding up of the Company, or (vi)
to declare or pay any dividend on the Common Stock of the Company payable in
shares of Common Stock of the Company or to effect a subdivision, combination or
consolidation of the Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the
Company), then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 25 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transaction, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Stock of the Company and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of shares of the Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of shares of the Common Stock of
the Company and/or Preferred Stock, whichever shall be the earlier.
(b) In case the Shares Acquisition Date shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of
a Right Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which notice shall describe
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement to be
-------
given or made by the Rights Agent or by the holder of any Right Certificate to
24
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
EQUIDYNE CORPORATION
000 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
AMERICAN STOCK TRANSFER & TRUST COMPANY
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 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 may supplement or amend this Agreement in any respect without the
approval of any holders of shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent may supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order to
(i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or
(iv) 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 Affiliate or Associate of an Acquiring Person);
provided, however, this Agreement may not be supplemented or amended to
-------- -------
lengthen, pursuant to clause (iii) of this sentence, (y) a time period relating
to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (z) 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. Upon the delivery of a certificate from an
25
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 number of one-hundredths of a share of Preferred Stock for
which a Right is exercisable (other than to reflect an adjustment effected by
the operation of any provision of this Agreement or which advances the Final
Expiration Date). Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of shares
of Common Stock. Notwithstanding any other provision hereof, the Rights Agent
shall not be required to consent to any amendment or supplement pursuant to this
Section 26 which alters in any adverse manner 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. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the shares of Common Stock of the Company) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the shares of Common Stock of the Company).
Section 29. Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court or governmental authority of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right Certificate issued
-------------
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State except for Sections 18, 19, 20 and 21 hereof which
shall be governed by and construed in accordance with the laws of the State of
New York.
Section 31. 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 one and the
same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
26
EQUIDYNE CORPORATION
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President and Chief
Financial Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
27
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES C PREFERRED STOCK
OF
EQUIDYNE CORPORATION
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
EQUIDYNE CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on January 22, 2001:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share, of the Corporation
(the "Preferred Stock"), and hereby states the designation and number of
shares, and fixes the relative rights, preferences, and limitations thereof
as follows:
Series C Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series C Preferred Stock" (the "Series C Preferred Stock")
and the number of shares constituting the Series B Preferred Stock shall be
500,000. Such number of shares may be increased or decreased by resolution
of the Board of Directors; provided, that no decrease shall reduce the
number of shares of Series C Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series C Preferred Stock with respect to dividends, the holders of shares
of Series C Preferred Stock, equally with holders of all other series of
Preferred Stock and in preference to the holders of Common Stock, par value
$.10 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January, April,
July and October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
A-1
share of Series C Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $1 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series C Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of shares of Series C Preferred Stock were entitled
immediately prior to such event under clause (i) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (a) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1 per share on the Series C Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series C
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series C Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
A-2
Section 3. Voting Rights. The holders of shares of Series C Preferred
-------------
Stock shall have no voting rights except as otherwise provided by law or as
set forth in the Corporation's Certificate of Incorporation or in this
Certificate of Designation.
Section 4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series C
Preferred Stock, except dividends paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation. or winding up) to the
Series C Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series C Preferred Stock, or any shares of stock ranking
on a parity with the Series C Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
A-3
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series C
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (ii) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except distributions made ratably on the Series C
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series C Preferred Stock were entitled immediately prior to
such event under the proviso in clause (i) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series C Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
A-4
Section 8. No Redemption. The shares of Series C Preferred Stock
-------------
shall not be redeemable.
Section 9. Rank. The Series C Preferred Stock shall rank, with
----
respect to the payment of dividends and the distribution of assets, junior to
all series of any class of the Corporation's Preferred Stock, and shall rank
superior to the Common Stock and any other class or series of junior stock.
Section 10. No Conversion. The shares of Series C Preferred Stock
-------------
shall not be convertible into or exchangeable for any other securities of the
Corporation.
Section 11. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series C Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding shares of Series C Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its President this day of , 2001.
---- -------
----------------------------------
A-5
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
-----
EQUIDYNE CORPORATION
NOT EXERCISABLE AFTER JANUARY 22, 2011, OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
TRANSFEREE OF SUCH RIGHTS SHALL BECOME NULL AND VOID.
Right Certificate
-----------------
This certifies that , or registered assigns, is the
--------------------
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of January 22, 2001 (as amended from time to time, the
"Rights Agreement"), between Equidyne Corporation, a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company (the "Rights Agent"), to
purchase, subject to any required regulatory approval, from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York City time, on January 21, 2011
(subject to earlier redemption or exchange of the Rights by the Company, as set
forth in the Rights Agreement), at the shareholders services office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid nonassessable share of Preferred Stock, Series C,
par value $.01 per share, (the "Preferred Stock"), of the Company, at a purchase
price of $40.00 per one one-hundredth of a share of Preferred Stock (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of February 14, 2001, based on the shares of
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number or amount of securities or other
assets which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
B-1
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at either the office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase.
Notwithstanding any provision of this Right Certificate to the contrary,
the Rights evidenced by this Right Certificate shall not be exercisable, and the
Company shall have no obligations hereunder, (a) unless and until any regulatory
approvals required for the issuance and/or sale of securities upon such exercise
have been obtained, (b) if the exercise thereof, or the issuance and/or sale of
the securities to be purchased upon such exercise, would violate or contravene
any applicable law, regulation or administrative or judicial order or (c) in any
jurisdiction if any requisite filings under any applicable securities laws shall
not have been made or become effective in such jurisdiction.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed or exchanged by the Company.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. No fractional
securities will be issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples of one one-hundredth
of such security, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of the Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of , 20 .
-------------- ---
ATTEST: EQUIDYNE CORPORATION
By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------
Authorized Signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered
holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
------------------------------
transfers unto - (Please print name and address of
--------------------------
transferee) - this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Right Certificate on the books
----------------
of the within-named Company, with full power of substitution.
Dated: , 20
--------------------- ---
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-4
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To: EQUIDYNE CORPORATION
The undersigned hereby irrevocably elects to exercise
------------------
Rights represented by this Right Certificate to purchase shares of the Series C
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such shares of Series C Preferred Stock be issued in the name
of:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: , 20
------------- --- ----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-5
[Form of Reverse Side of Right Certificate -- continued]
Certificate
-----------
The undersigned hereby certifies, for the benefit of the Company and other
holders of Rights, by checking the appropriate boxes, that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: , 20
------------- --- ----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
NOTICE
------
The signature in the foregoing Forms of Assignment and Election to Purchase
and Certificate must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
B-6
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SERIES C PREFERRED STOCK
General
-------
On January 22, 2001, the Board of Directors of Equidyne Corporation (the
"Company") declared a dividend of one preferred share purchase right ("Right")
for each outstanding share of Common Stock to holders of Common Stock
outstanding on February 14, 2001 or issued thereafter. The dividend is payable
on February 14, 2001 (the "Record Date") to stockholders of record on that date.
The description and terms of the Rights are set forth in the Rights Agreement,
dated as of January 22, 2001 (the "Rights Agreement"), between the Company and
American Stock Transfer & Trust Company, as Rights Agent. The Rights Agreement
is incorporated herein. The following statements are qualified in their entirety
by reference to the Rights Agreement. Certain of the capitalized terms used in
the following description have the meanings set forth in the Rights Agreement.
Purchase Price
--------------
Each Right will entitle the registered holder, subject to regulatory
approvals and other specified conditions, to purchase one one-hundredth of a
share of the Company's Series C Preferred Stock, without par value, (the "Series
C Preferred Stock"), at a purchase price of $40.00 (the "Purchase Price"). The
Rights will be exercisable only if a person or group
o acquires beneficial ownership of 15% or more of the outstanding shares
of Common Stock, or
o commences a tender or exchange offer, the consummation of which would
result in the beneficial ownership by a person or group of 15% or more
of the outstanding shares of Common Stock.
Until that time, the Rights will be evidenced by and will trade with the
shares of Common Stock. The Rights will expire on January 21, 2011 unless the
Company first redeems or exchanges them, in each case as described below.
The purchase of stock pursuant to the Rights may be subject to regulatory
approvals and other specified conditions. Under no circumstances will a person
or group that acquires 15% of the Common Stock be entitled to exercise Rights.
"Flip-in"
---------
If any person or group acquires beneficial ownership of 15% or more of the
outstanding shares of Common Stock and the Company is the surviving entity in a
merger or other acquisition transaction with such person or group, each Right
will entitle its holder to purchase that number of shares of Common Stock or, at
the option of the Company, Series C Preferred Stock, which has a market value at
that time of twice the Purchase Price.
"Flip-over"
-----------
In the event that any person or group has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock, and the Company
o consolidates or merges with or into, or
o sells 50% or more of its assets or earning power to,
any person or group, each Right would instead entitle its holder to purchase the
acquiring company's common shares having a market value of twice the Purchase
Price.
Exchange
--------
If a person or group acquires beneficial ownership of more than 15% but
less than 50% of the outstanding shares of Common Stock, the Company may
exchange each outstanding Right for one share of Common Stock or cash,
securities or other assets having a value equal to the market value of one share
of Common Stock. That exchange may be subject to regulatory approvals.
Redemption
----------
The Company may redeem the Rights, at a redemption price of $0.001 per
Right, at any time until any person or group has acquired beneficial ownership
of 15% or more of the outstanding shares of Common Stock.
Certain Adjustments
-------------------
The Purchase Price, the amount and type of securities covered by each Right
and the number of Rights outstanding will be adjusted to prevent dilution
o in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Series C Preferred Stock,
o if holders of the Series C Preferred Stock are granted certain
rights, options or warrants to subscribe for Series C Preferred
Stock or securities convertible into Preferred Stock or
equivalent preferred shares at less than the current market price
of the Preferred Stock, or
o upon the distribution to holders of the Series C Preferred Stock
of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be made
until cumulative adjustments amount to a least 1% of the Purchase Price. The
Company will not issue fractional shares of Series C Preferred Stock other than
in integral multiples of one ten-thousandth of a share. Instead, the Company
will make an adjustment in cash based on the market price of the Series C
Preferred Stock on the last trading date prior to the date of exercise.
2
Amounts Outstanding
-------------------
The Company will distribute one Right to stockholders of the Company for
each share of Common Stock owned of record by them at the close of business on
February 14, 2001. Until the earliest of
o such time as any person or group acquires beneficial ownership of
15% or more of the outstanding shares of Common Stock,
o January 21, 2011, or
o the redemption of the Rights,
the Company will issue one Right with each share of Common Stock that is issued
after February 14, 2001 so that each outstanding share of Common Stock will have
an appurtenant Right. The Company has initially authorized and reserved 500,000
shares of Series C Preferred Stock for issuance upon exercise of the Rights. The
authorized capital stock of the Company presently consists of 35,000,000 shares
of Common Stock, par value $.10 per share and 1,000,000 shares of Preferred
Stock, par value $.01 per share. As of November 15, 2000, 16,347,959 shares of
Common Stock were outstanding and no shares of Preferred Stock were outstanding.
Amendment
---------
The Company may amend the Rights Agreement in any respect until any person
or group has acquired beneficial ownership of 15% or more of the outstanding
shares of Common Stock. Thereafter, the Company may amend the Rights Agreement
in any manner which will not adversely affect the holders of the Rights in any
material respect.
