Exhibit 4.3
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FORM OF
NEXTLEVEL SYSTEMS, INC.
and
, as
Rights Agent
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Rights Agreement
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Dated as of ____________, 1997
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TABLE OF CONTENTS
Page
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SECTION 1. Certain Definitions....................................2
SECTION 2. Appointment of Rights Agent............................7
SECTION 3. Issue of Right Certificates............................7
SECTION 4. Form of Right Certificate.............................10
SECTION 5. Countersignature and Registration.....................11
SECTION 6. Transfer, Split-Up, Combination and Exchange
of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right
Certificate.........................................12
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights...........................14
SECTION 8. Cancellation and Destruction of Right
Certificates........................................18
SECTION 9. Reservation and Availability of Capital
Stock...............................................18
SECTION 10. Preferred Shares Record Date..........................20
SECTION 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights..................20
SECTION 12. Certificate of Adjusted Purchase Price or
Number of Shares....................................33
SECTION 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.............................33
SECTION 14. Fractional Rights and Fractional Shares...............37
SECTION 15. Rights of Action......................................39
SECTION 16. Agreement of Right Holders............................40
SECTION 17. Right Certificate Holder Not Deemed a
Stockholder.........................................41
SECTION 18. Concerning the Rights Agent...........................42
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SECTION 19. Merger or Consolidation or Change of Name of
Rights Agent........................................42
SECTION 20. Duties of Rights Agent................................43
SECTION 21. Change of Rights Agent................................47
SECTION 22. Issuance of New Right Certificates....................48
SECTION 23. Redemption and Termination............................49
SECTION 24. Exchange..............................................52
SECTION 25. Notice of Certain Events..............................53
SECTION 26. Notices...............................................55
SECTION 27. Supplements and Amendments............................56
SECTION 28. Determination and Actions by the Board, etc...........57
SECTION 29. Successors............................................58
SECTION 30. Benefits of this Agreement............................58
SECTION 31. Severability..........................................58
SECTION 32. Governing Law.........................................58
SECTION 33. Counterparts..........................................59
SECTION 34. Descriptive Headings..................................59
EXHIBIT A - Certificate of Designation, Preferences and Rights of
Series A Participating Preferred Stock of NextLevel
Systems, Inc.
EXHIBIT B - Form of Right Certificate
EXHIBIT C - Summary of Rights to Purchase Preferred Shares
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DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person............................................ Section 1(a)
Act......................................................... Section 1(b)
Adjusted Number of Shares................................... Section 11(a)
Adjusted Purchase Price..................................... Section 11(a)
Adjustment Shares........................................... Section 11(a)
Affiliate................................................... Section 1(c)
Agreement................................................... Preface
Associate................................................... Section 1(c)
beneficially own............................................ Section 1(d)
Beneficial Owner............................................ Section 1(d)
Board....................................................... Preface
Business Day................................................ Section 1(e)
capital stock equivalent.................................... Section 11(a)
Close of Business........................................... Section 1(f)
Common Shares............................................... Section 1(g)
Company..................................................... Preface
current per share market price.............................. Section 11(d)
Disinterested Directors..................................... Section 1(h)
Distribution Date........................................... Section 3(a)
equivalent preferred shares................................. Section 11(b)
Exchange Act................................................ Section 1(c)
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Exchange Ratio.............................................. Section 24(a)
Final Expiration Date....................................... Section 7(a)
FLC Entity.................................................. Section 1(i)
Interested Stockholder...................................... Section 1(j)
NASDAQ...................................................... Section 11(d)
Permitted Offer............................................. Section 1(k)
Person...................................................... Section 1(l)
Preferred Shares............................................ Section 1(m)
Principal Party............................................. Section 13(b)
Proration Factor............................................ Section 11(a)
Purchase Price.............................................. Section 4(a)
Record Date................................................. Preface
Redemption Date............................................. Section 7(a)
Redemption Price............................................ Section 23(a)
Summary of Rights........................................... Section 3(b)
Right....................................................... Preface
Right Certificate........................................... Section 3(a)
Rights Agent................................................ Preface
Rights Agreement............................................ Section 3(c)
Section 11(a)(ii) Event..................................... Section 1(n)
Section 13 Event............................................ Section 1(o)
Security.................................................... Section 11(d)
Shares Acquisition Date..................................... Section 1(p)
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Subsidiary.................................................. Section 1(q)
Summary of Rights........................................... Section 3(b)
then outstanding............................................ Section 1(d)
Trading Day................................................. Section 11(d)
Transaction................................................. Section 1(r)
Transaction Person.......................................... Section 1(s)
Triggering Event............................................ Section 1(t)
voting securities........................................... Section 13(a)
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RIGHTS AGREEMENT, dated as of __________, 1997, between NextLevel
Systems, Inc., a Delaware corporation (the "Company"), and a
company ("Rights Agent").
The Board of Directors of the Company (the "Board") (i) authorized
and declared a dividend distribution of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Company
outstanding at the close of business on the date (the "Record Date") to be set
by the Board of Directors of General Instrument Corporation , a Delaware
corporation ("GI"), for the distribution of Common Shares to the holders of
shares of common stock, par value $.01 per share, of GI, as contemplated by the
Distribution Agreement, dated as of ______, 1997 and as amended from time to
time, among GI, the Company and CommScope, Inc., and (ii) authorized the
issuance of one Right (subject to adjustment as provided herein) for each Common
Share that shall become outstanding between the Record Date and the Distribution
Date (as such term is defined herein), with each Right initially representing
the right to purchase one one-thousandth (subject to adjustment as provided
herein) of a Preferred Share (as hereinafter defined) upon the terms and subject
to the conditions provided herein.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the then outstanding Common Shares (other than as a result of
a Permitted Offer) or was such a Beneficial Owner at any time after the date
hereof, whether or not such person continues to be the Beneficial Owner of 15%
or more of the then outstanding Common Shares. Notwithstanding the foregoing,
(i) the term "Acquiring Person" shall not include (A) the Company, (B) any
Subsidiary of the Company, (C) any employee benefit plan of the Company or of
any Subsidiary of the Company, (D) any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan acting
in such capacity or (E) any FLC Entity, provided that the FLC Entities may
acquire the Beneficial Ownership of additional Common Shares to the extent that
the percentage of Common Shares Beneficially Owned by them in the aggregate,
after giving effect to such acquisition, does not exceed 20% of the then
Outstanding Common Shares of the Company; and (ii) no Person shall become an
"Acquiring Person" (x) as a result of the acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding, increases
the proportional number of shares beneficially owned by such Person together
with all Affiliates and Associates of such Person, provided, that if (1) a
Person would become an Acquiring Person (but for the operation of this clause
(x)) as a result of the acquisition of Common Shares by the Company, and (2)
after such share acquisition by the Company, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any additional Common
Shares, then such Person shall be deemed an Acquiring Person, or (y) if (1)
within five Business Days after such Person would otherwise
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have become or, if such Person did so inadvertently, after such Person discovers
that such Person would otherwise have become, an Acquiring Person (but for the
operation of this clause (y)), such Person notifies the Board that such Person
did so inadvertently, and (2) within two Business Days after such notification
(or such greater period of time as may be determined by action of the Board, but
in no event greater than five Business Days), such Person divests itself of a
sufficient number of Common Shares so that such Person is the Beneficial Owner
of such number of Common Shares that such Person no longer would be an Acquiring
Person.
(b) "Act" shall mean the Securities Act of 1933, as amended and as
in effect on the date of this Agreement.
(c) "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 and as in effect on the date of
this Agreement (the "Exchange Act").
(d) 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, directly or indirectly;
(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 any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or
exchange offer made
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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 or consent given
to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under 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 (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities) relating to the acquisition, holding, voting (except to
the extent contemplated by the proviso to Section l(d)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of a Beneficial Owner to
the contrary, the phrase "then outstanding", when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
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(e) "Business Day" shall mean any day other than a Saturday, Sunday,
U.S. federal holiday or any day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Shares" when used without reference or with reference to
the Company shall mean the shares of Common Stock, par value of $.01 per share,
of the Company or, in the event of a subdivision, combination or consolidation
with respect to such shares of Common Stock, the shares of Common Stock
resulting from such subdivision, combination or consolidation. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest combined economic and
voting power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Disinterested Directors" shall mean the members of the Board
who are not (i) employees of the Company, (ii) Acquiring Persons or their
Affiliates or Associates or representatives of any of them, or (iii) any Person
who was directly or indirectly proposed or nominated as a director of the
Company by a Transaction Person.
(i) "FLC Entities" shall mean Instrument Partners, a New York
limited partnership, Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-IV, a New York limited partnership, Xxxxxxxx X.
Xxxxxxxxx, Xxxxxxxx X. Xxxxxxxxx, Xx. Xxxxx Xxxxxx, Xxxxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, and their
Affiliates and Associates who or which shall be
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considered as one Person and references to the FLC Entities shall include any or
all such persons.
(j) "Interested Stockholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest which represents
in excess of 5% of the total combined economic or voting power of such Person,
or any other Person acting directly or indirectly on behalf of, or in concert
with, any such Acquiring Person, Affiliate or Associate.
(k) "Permitted Offer" shall mean a tender or exchange offer for all
outstanding Common Shares which is at a price and on terms determined, prior to
the purchase of such shares under such tender or exchange offer, by at least a
majority of the Disinterested Directors, to be adequate and otherwise in the
best interests of the Company and its stockholders (other than the Person, or
any Affiliate or Associate thereof, on whose behalf the offer is being made)
taking into account all factors that such Disinterested Directors may deem
relevant.
(l) "Person" shall mean any individual, firm, partnership,
corporation, trust, association, joint venture or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the relative rights, preferences and limitations set forth in the Form of
Certificate of Designation, Preferences and Rights attached to this Agreement as
Exhibit A.
(n) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
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(o) "Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
(p) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(q) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(r) "Transaction" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition of Common Shares of
the Company which would result in a Person becoming a Transaction Person.
(s) "Transaction Person" with respect to a Transaction shall mean
(i) any Person who (A) is or will become an Acquiring Person if the Transaction
were to be consummated and (B) directly or indirectly proposed or nominated a
director of the Company which director is in office at the time of consideration
of the Transaction, or (ii) an Affiliate or Associate of such a Person.
(t) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
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SECTION 3. Issue of Right Certificates. (a) The Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company) until the earlier to occur of (i)
the Shares Acquisition Date or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Board) after the
date of the commencement by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) of, or of the first
public announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) to
commence (which intention to commence remains in effect for five (5) Business
Days after such announcement), a tender or exchange offer the consummation of
which would result in any Person becoming an Acquiring Person (including, in the
case of both clauses (i) and (ii) of this Section 3(a), any such date which is
after the date of this Agreement and prior to the issuance of the Rights), the
earlier of such dates being herein referred to as the "Distribution Date";
provided, however, that if the tender offer is terminated prior to the
occurrence of a Distribution Date, then no Distribution Date shall occur as a
result of such tender offer. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign and
send, or cause to be sent, by first-class, insured, postage prepaid mail, to
each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right
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Certificate, substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of and
after the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the Record Date, the
Company shall send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record Date, at the address
of such holder shown on the records of the Company. Upon the execution and
delivery of this Agreement, or as soon as practicable thereafter, the Company
shall file the full text of this Agreement and the Summary of Rights with the
Securities and Exchange Commission. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the earlier of the Redemption Date
or the Final Expiration Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with such Common Shares. As a result of the execution
of this Agreement on, 1997, each Common Stock outstanding as of the Close of
Business on, 1997 shall, subject to the terms and conditions of this
Agreement, also represent one Right and shall, subject to the terms and
conditions of this Agreement, represent the right to purchase one
one-thousandth of a share of Preferred Stock.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this Section 3(c)) after the Record Date but prior to the earliest
of the Distribution
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Date, the Redemption Date or the Final Expiration Date shall be deemed also to
be certificates for Rights and from and after the date hereof shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between NextLevel
Systems, Inc. and , dated as of
, 1997 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of NextLevel Systems, Inc.. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. NextLevel Systems, Inc. will mail
to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor from such
holder. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and certain related persons,
whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
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SECTION 4. Form of Right Certificate. (a) The Right Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as shall be set forth therein at the price
per one one-thousandth of a Preferred Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
hereof and any Right Certificate issued pursuant to Section 6 or 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement). Accordingly, this Right Certificate and the
Rights represented hereby are null and void.
Provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Right Certificate.
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SECTION 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates
may nevertheless be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; 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 Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated as the appropriate place for surrender of
such Right Certificate for transfer, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the
certificate number 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 Certificate. Subject to
the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the Close
of Business on
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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-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split-up, combine or exchange any Right Certificate or
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 principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to the provisions
of Sections 4(b), 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.
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
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Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered 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, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for the total
number of one one-thousandths of a Preferred Share (or other securities, as the
case may be) as to which such surrendered Rights are exercised, at or prior to
the earliest of (i) the Close of Business on , 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), (iii) the time at which the Rights are exchanged
as provided in Section 24 hereof, or (iv) the consummation of a transaction
contemplated by Section 13(d) hereof.
(b) From and after the date hereof, the Purchase Price for each
one-thousandth of a Preferred Share pursuant to the exercise of a Right shall be
$[ ].00, subject to adjustment from time to time as provided in the third
sentence of this Section 7(b) and in Sections 11 and 13(a) hereof. The Purchase
Price shall be payable in accordance with Section 7(c) below. Anything in this
Agreement to the contrary notwithstanding, in the event that at any time after
the date hereof and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common
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Shares payable in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case, each Common Share outstanding following such
subdivision, combination or consolidation shall continue to have one Right
(subject to adjustment as provided herein) associated therewith and the Purchase
Price following any such event shall be proportionately adjusted to equal the
result obtained by multiplying the Purchase Price immediately prior to such
event by a fraction the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustment provided for
in the preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(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 Preferred Shares (or other
securities, as the case may be) 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 6 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent (if the Company, in its
sole discretion, shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights hereunder into a depositary) depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to
be purchased (in which case certificates for
- 15 -
the Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such requests, (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 thereof, deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the event that the Company
is obligated to issue other securities (including Common Shares) of the Company
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities are available for distribution by the
Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii) hereof, the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) hereof
and if less than all the Rights represented by such Right Certificate were so
exercised, the Rights Agent shall indicate on the Right Certificate the number
of Rights represented thereby which continue to include the rights provided by
Section 11(a)(ii) 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, or the
Rights Agent shall place an appropriate notation on the Right Certificate with
respect to those Rights exercised.
- 16 -
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate
thereof, (ii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) 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 a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) 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
- 17 -
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise (other than a partial
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 Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock. The
Company covenants and agrees that at all time prior to the occurrence of a
Section 11(a)(ii) Event it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares, or any authorized and issued
Preferred Shares held in its treasury, the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights and,
after the occurrence of a Section 11(a)(ii) Event, shall, to the extent
reasonably practicable, so reserve and keep available a sufficient number of
Common Shares (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares, or any other securities, as the case may
be)
- 18 -
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (or Common Shares and/or
other securities, as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares or securities.
The Company further covenants and agrees that it will pay when due
and payable any and all U.S. 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 Preferred Shares (or Common Shares and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any 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 the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
- 19 -
The Company shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if required by law, at
such earlier time following the Distribution Date as so required), a
registration statement under the Act with respect to the securities purchasable
upon exercise of Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights provided by Section
11(a)(ii) hereof. The Company will also take such action as may be appropriate
under the blue sky laws of the various states.
SECTION 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each
- 20 -
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into
a smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs
which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
- 21 -
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then
proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall, for a
period of sixty (60) days after the later of (i) the occurrence of
any such event or (ii) the effective date of an appropriate
registration statement under the Act pursuant to Section 9 hereof,
have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price, in accordance with the terms of
this Agreement, such number of Common Shares (or, in the discretion
of the Board, one one-thousandths of a Preferred Share) as shall
equal the result obtained by (A) multiplying the then current
Purchase Price by the then number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event and (B)
dividing that product by 50% of the then current per share market
price of the Company's Common Shares (determined pursuant to Section
11(d) hereof) on the date of such first occurrence (such number of
shares being referred to as the "Adjustment Shares"); provided,
however, that if the transaction that would otherwise give rise to
the foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13 hereof
shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved) Common
Shares to permit the exercise in full of the Rights in accordance
with the foregoing Section 11(a)(ii) and the Rights become so
exercisable (and the Board has determined to make the Rights
exercisable into fractions of a Preferred Share), notwithstanding
any other provision of this Agreement, to the extent necessary and
permitted by applicable law, each Right shall thereafter represent
the right to receive, upon exercise thereof
- 22 -
at the then current Purchase Price in accordance with the terms of
this Agreement, (A) a number of (or fractions of) Common Shares (up
to the maximum number of Common Shares which may permissibly be
issued) and (B) a number of one one-thousandths of a Preferred Share
or a number of (or fractions of) other equity securities of the
Company (or, in the discretion of the Board, debt) which the Board
has determined to have the same aggregate current market value
(determined pursuant to Sections 11(d)(i) and 11(d)(ii) hereof, to
the extent applicable) as one Common Share (such number of (or
fractions of) Preferred Shares (or other equity securities or debt
of the Company) being referred to as a "capital stock equivalent"),
equal in the aggregate to the number of Adjustment Shares; provided,
however, if sufficient Common Shares and/or capital stock
equivalents are unavailable, then the Company shall, to the extent
permitted by applicable law, take all such action as may be
necessary to authorize additional Common Shares or capital stock
equivalents for issuance upon exercise of the Rights, including the
calling of a meeting of stockholders; and provided, further, that if
the Company is unable to cause sufficient Common Shares and/or
capital stock equivalents to be available for issuance upon exercise
in full of the Rights, then each Right shall thereafter represent
the right to receive the Adjusted Number of Shares upon exercise at
the Adjusted Purchase Price (as such terms are hereinafter defined).
As used herein, the term "Adjusted Number of Shares" shall be equal
to that number of (or fractions of) Common Shares (and/or capital
stock equivalents) equal to the product of (A) the number of
Adjustment Shares and (B) a fraction, the numerator of which is the
number of Common Shares (and/or capital stock equivalents) available
for issuance upon exercise of the Rights and the denominator of
which is the aggregate number of Adjustment Shares otherwise
issuable upon exercise in full of all Rights (assuming there were a
sufficient number of Common Shares available) (such fraction being
referred to
- 23 -
as the "Proration Factor"). The "Adjusted Purchase Price" shall mean
the product of the Purchase Price and the Proration Factor. The
Board may, but shall not be required to, establish procedures to
allocate the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights and privileges as the Preferred Shares
("equivalent preferred shares") or securities convertible into Preferred Shares
or equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as determined
pursuant to Section 11(d) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par
- 24 -
value of the shares of capital stock of the Company issuable upon the exercise
of one Right. 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 determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price (as determined pursuant to
Section 11(d) hereof) of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on 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 Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par
- 25 -
value of the shares of capital stock of the Company to be issued upon exercise
of one Right. 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 thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price
of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of thirty (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 per share market price equivalent of
such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed
- 26 -
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, Inc. Automated
Quotations 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, selected by the Board,
making a market in the Security. If on any such date no such market
maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board shall
be used. 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. Subject to Section
11(d)(ii) hereof, if any Security is not publicly held or so listed
or traded, "current per share market price" of such Security shall
mean the fair market value per share as determined in good faith by
the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in the foregoing
Section 11(d)(i). If the Preferred Shares are not publicly traded,
the current per share market price of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to the foregoing Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock
dividend or
- 27 -
similar transaction occurring after the date hereof), multiplied by
one thousand (1,000). If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent.
(e) Notwithstanding anything herein to the contrary, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandth of a Preferred Share or one
hundred-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
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a) through 11(c)
hereof, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Shares shall apply on like terms to any such other
shares.
- 28 -
(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-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
hundred-thousandth of a Preferred Share) obtained by (i) multiplying (A) the
number of Preferred Shares covered by a Right immediately prior to this
adjustment of the Purchase Price by (B) 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 lieu of any adjustment in
the number of one one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
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
- 29 -
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 ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
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 one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the number of one
one-thousandths of a Preferred Share, Common Shares or other securities issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such
- 30 -
number of fully paid and nonassessable one one-thousandths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a Preferred Share, Common Shares or other
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a Preferred Share, Common Shares or other
securities of the Company, if any, issuable upon exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, 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 (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
stock dividends, or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the
- 31 -
Company in a transaction which does not violate Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(o) hereof), or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction, or
a series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which does not violate
Section 11(o) hereof), if (A) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (B) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or 27 hereof, take (or
permit any Subsidiary to take) any action the purpose of which is to, or if at
the time such action is taken it is reasonably foreseeable that the effect of
such action is to, materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall only
result in the reduction of rights under Section 11(a)(ii) hereof to the extent
so exercised
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and shall not otherwise affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13 hereof.
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
26 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (i) the Company shall consolidate with, or merge
with and into, any Interested Stockholder or, if in such merger or consolidation
all holders of Common Shares are not treated alike, any other Person, (ii) the
Company shall consolidate with, or merge with, any Interested Stockholder or, if
in such merger or consolidation all holders of Common Shares are not treated
alike, any other Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in clause (i) or (ii) above of this Section 13(a), a
merger or consolidation which would result in all of the securities generally
entitled to vote in the election of directors ("voting securities") of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the
- 33 -
holders (and relative percentage holdings of each such holder) of such
securities not having changed as a result of such merger or consolidation), or
(iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Interested Stockholder or Stockholders or, if in such transaction
all holders of Common Shares are not treated alike, any other Person, (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which does not violate Section 11(o) hereof), then, and in each such
case (except as provided in Section 13(d) hereof), proper provision shall be
made so that (A) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price, in accordance with the terms
of this Agreement and in lieu of Preferred Shares, such number of freely
tradable Common Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and dividing that product
by (2) 50% of the then current per share market price of the Common Shares of
such Principal Party (determined pursuant to Section 11(d) hereof) on the date
of consummation of such Section 13 Event; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (C)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; and (D) such Principal Party shall take such steps (including, but not
limited to, the reservation of a
- 34 -
sufficient number of its Common Shares) in connection with the consummation of
any such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(i) or (ii) of the first sentence of Section 13(a) hereof, the
Person that is the issuer of any securities into which Common Shares
of the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party to
such merger or consolidation (including, if applicable, the Company
if it is the surviving corporation); and
(ii) in the case of any transaction described in clause
(iii) of the first sentence of Section 13(a) hereof, the Person that
is the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the Common Shares
of such Person are not at such time, and have not been continuously over the
preceding twelve (12) month period, registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another Person the
Common Shares of which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or
indirectly, by
- 35 -
the same Person, the rules set forth in clauses (1) and (2) above of this
Section 13(b) shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all of
such joint venturers, and the Principal Parties in each such chain shall bear
the obligations set forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized Common Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in Sections 13(a) and 13(b) hereof and further providing
that, as soon as practicable after the date of any consolidation, merger, sale
or transfer mentioned in Section 13(a) hereof, the Principal Party at its own
expense shall:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing, and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary or
appropriate; and
- 36 -
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) hereof and shall survive any exercise
thereof.
(d) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clause (i) or (ii) of Section 13(a) hereof if (A) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons),
(B) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer, and (C) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
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
- 37 -
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported 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, selected by the Board, making a market in the Rights. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board shall be
used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-thousandth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have the rights, privileges and preferences to which they are entitled as
beneficial
- 38 -
owners of the Preferred Shares represented by such depositary receipts. In lieu
of fractional Preferred Shares that are not one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive Common
Shares, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Company shall not be required to
issue fractions of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares, capital stock
equivalents or other securities. In lieu of fractional shares or units of such
Common Shares, capital stock equivalents or other securities, the Company may
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such Common Shares, capital stock
equivalents or other securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent shall
have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional share upon
exercise of a Right (except as provided above).
- 39 -
SECTION 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in 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 the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
- 40 -
(c) subject to Sections 6 and 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 Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or a beneficial interest in a Right or other Person as a result of
its inability to perform any of its obligations under this Agreement by reason
of any preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
SECTION 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
- 41 -
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or other distributions, or to exercise any preemptive 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. 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. In no case shall the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Rights Agent has been advised of
the likelihood of such loss or damage.
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 Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons.
- 42 -
SECTION 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or all or substantially all of the corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided, 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 a 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 or in the name of the successor Rights Agent. In all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
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. In all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
- 43 -
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
(including, without limitation, the identity of any Acquiring Person and the
determination of the current per share market price of any Security) be proved
or established by the Company prior to taking 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, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 or be
- 44 -
required to verify the same (except its countersignature thereof). 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 Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of the certificate described in Section 12
hereof); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Preferred Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Preferred Shares or Common Shares or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable; nor shall it be under any duty to make any independent
investigation or determination of the identity of any Acquiring Person or any
Affiliate or Associate thereof, but shall be entitled to rely, in the absence of
instructions identifying any such Person, on representations made by holders of
Right Certificates.
(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.
- 45 -
(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, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company, or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company, or otherwise act as fully and freely as though it were not 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, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights
hereunder if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
- 46 -
(k) If, with respect to any Right Certificates surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of 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 thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Preferred Shares or Common Shares by registered or
certified 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
sixty (60) 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 Preferred
Shares or Common Shares by registered or certified mail, and to 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 sixty (60) 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 either (i) a corporation organized and doing business
under the laws of the United States or of the State of New York or the State of
Illinois (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 New York
or the State of
- 47 -
Illinois), in good standing, 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
$50,000,000 (or such lower number as approved by the Board) or (ii) an affiliate
of such a corporation. 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 Preferred Shares or Common Shares and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change in
the Purchase Price 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 Common
Shares following the Distribution Date and prior to the earliest of the
Redemption Date, the Final Expiration Date and the consummation of a transaction
contemplated by Section 13(d) hereof, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant
- 48 -
to the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities, notes or debentures
issued by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that no Right Certificates shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. Redemption and Termination. (a) (i) The Board may, at
its option, redeem all, but not less than all, of the then outstanding Rights at
a redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), at any time prior to the earlier of (A)
the occurrence of a Section 11(a)(ii) Event or (B) the Final Expiration Date,
and the Company may, at its option, pay the Redemption Price either in Common
Shares (based on the "current per share market price", as defined in Section
11(d) hereof, of the Common Shares at the time of redemption) or cash; provided,
however, that if the Company elects to pay the Redemption Price in Common
Shares, the Company shall not be required to issue any fractional Common Shares,
and the number of Common Shares issuable to each holder of Rights shall be
rounded down to the next whole share.
(ii) In addition, the Board may, at its option, at any time
following a Shares Acquisition Date but prior to any Section 13 Event redeem
all, but not less than all, of the then outstanding Rights at the Redemption
Price (x) in connection with any merger, consolidation or sale or other transfer
(in one transaction or in a series of related transactions) of assets or earning
power aggregating 50% or more of the earning power of the Corporation and its
subsidiaries (taken as a whole) (A) in which all holders of
- 49 -
Common Shares are treated alike and (B) not involving (other than as a holder of
Common Shares being treated like all other such holders) an Interested
Stockholder, or (y)(A) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 5% of the Common Shares, and (B) at the time
of redemption no other Persons are Acquiring Persons.
(b) In the case of a redemption permitted under Section 23(a)(i)
hereof, immediately upon the date for redemption set forth in (or determined in
the manner specified in) a resolution of the Board ordering the redemption of
the Rights, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. In the case of
a redemption permitted only under Section 23(a)(ii) hereof, evidence of which
shall have been filed with the Rights Agent, the right to exercise the Rights
will terminate and represent only the right to receive the Redemption Price upon
the later of ten (10) Business Days following the giving of notice or the
expiration of any period during which the rights under Section 11(a)(ii) hereof
may be exercised. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within ten (10)
days after such date for redemption set forth in a resolution of the Board
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the
- 50 -
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 and other than in connection with the purchase of
Common Shares prior to the Distribution Date.
(c) In the case of a redemption permitted under Section 23(a)(i)
hereof, the Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Common Shares, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the Company.
SECTION 24. Exchange. (a) The Board may, at its option, at any time
after the time that any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Sections 7(e) and 11(a)(ii)
hereof) for Common Shares of the Company at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction involving either the Common Shares or the
Preferred Shares occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, any entity holding Common
Shares for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
- 51 -
(b) Immediately upon the action of the Board ordering the exchange
of any Rights pursuant to Section 24(a) hereof and without any further action
and without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Sections 7(e) and 11(a)(ii) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one-thousandth of a Preferred
Share (or equivalent preferred share) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Common Share shall have the same voting rights as one
Common Share.
(d) The Board shall not authorize any exchange transaction referred
to in Section 24(a) hereof unless at the time such exchange is authorized there
shall be
- 52 -
sufficient Common Shares or Preferred Shares issued but not outstanding, or
authorized but unissued, to permit the exchange of Rights as contemplated in
accordance with this Section 24.
SECTION 25. 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
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regularly quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does not violate Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action to the extent feasible and file a certificate with the Rights
Agent to that effect, which shall specify the record date for the purposes of
such stock dividend or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be fixed.
Such notice shall be so given in the case of any action covered by clause (i) or
(ii) above of this
- 53 -
Section 25(a) at least twenty (20) days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the Preferred Shares, whichever shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all references in the
foregoing Section 25(a) to Preferred Shares shall be deemed thereafter to refer
also, if appropriate, to Common Shares and/or, if appropriate, other securities
of the Company.
SECTION 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, and addressed (until another address is filed
in writing with the Rights Agent) as follows:
NextLevel Systems, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 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
- 54 -
by first-class mail, postage prepaid, and addressed (until another address is
filed in writing with the Company) as follows:
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 or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares, shall be sufficiently given or made if sent by first-class mail,
postage prepaid, and addressed to such holder at the address of such holder as
shown on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior to the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate thereof); provided, however,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the
- 55 -
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
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of the Rights
Agent under Section 18 or 20 of this Agreement. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.
SECTION 28. Determination and Actions by the Board, etc. The Board
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or to
amend this Agreement and whether any proposed amendment adversely affects the
interests of the holders of Right Certificates). For all purposes of this
Agreement, any calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares or any other securities
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right
- 56 -
Certificates and all other parties, and (y) not subject the Board to any
liability to the holders of the Right Certificates.
SECTION 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 30. Benefits of this Agreement. 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 Common Shares), and nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement.
SECTION 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
SECTION 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to
- 57 -
be an original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
- 58 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first above written.
NEXTLEVEL SYSTEMS, INC.
By: ________________________________
Name:
Title:
the Rights Agent
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
- 59 -
EXHIBIT A
NEXTLEVEL SYSTEMS, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We,
, and , of NextLevel Systems, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware (the "Corporation"), in accordance with the provisions of
Section 103 thereof, do hereby certify:
That pursuant to the authority conferred upon the Board of Directors
by the Corporation's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Board of Directors on , 1997, adopted
the following resolution creating a series of shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock:
WHEREAS, the Certificate of Incorporation provides that the
Corporation is authorized to issue ,000,000 shares of preferred stock, none
of which are outstanding, now therefore it is.
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article FOURTH of the Certificate of
Incorporation, a series of Preferred Stock of the Corporation be, and it hereby
is, created out of the authorized but unissued shares of the capital stock of
the Corporation, such series to be designated Series A Junior Participating
Preferred Stock (the "Participating Preferred Stock"), to consist of hundred
thousand ( ,000) shares, par value $.01 per share, of which the preferences
and relative and other rights, and the qualifications, limitations or
restrictions thereof, shall be as follows:
1. Future Increase or Decrease. Subject of paragraph 4(e) of this
resolution, the number of shares of said series may at any time or from time to
time be
increased or decreased by the Board of Directors notwithstanding that shares of
such series may be outstanding at such time of increase or decrease.
2. Dividend Rate.
(a) The holders of shares of Participating Preferred 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 each November, February, May and August 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 share of Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of (a)
$10.00 or (b) 1,000 times the aggregate per share amount of all cash dividends
and 1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend 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, par value $.01 per
share, of the Corporation (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 Participating Preferred Stock.
(b) On or after the first issuance of any share or fractional
share of Participating Preferred Stock, no dividend on Common Stock shall be
declared unless concurrently therewith a dividend or distribution is declared on
the Participating Preferred Stock as provided in paragraph (a) above; and the
declaration of any such dividend on the Common Stock shall be expressly
conditioned upon payment or declaration of and provision for a dividend on the
Participating Preferred Stock as above provided. In the event no dividend or
distribution shall have been declared on the Common Stock during
A-2
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share on the
Participating 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 Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Participating
Preferred Stock, 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 Participating
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. The Board of Directors may
fix a record date for the determination of holders of shares of Participating
Preferred Stock entitled to receive payment of a dividend distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
3. Dissolution, Liquidation and Winding Up. In the event of any
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Corporation (hereinafter referred to as a "Liquidation"), the holders of
Participating Preferred Stock shall receive at least $100.00 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 Participating Preferred Stock shall be entitled to receive at least an
aggregate amount per share equal to 1,000 times the
A-3
aggregate amount to be distributed per share to holders of Common Stock (the
"Participating Preferred Liquidation Preference").
4. Voting Rights. The holders of shares of Participating Preferred
Stock shall have the following voting rights:
(a) Each share of Participating Preferred Stock shall entitle
the holder thereof to one thousand (1,000) votes on all matters submitted to a
vote of the stockholders of the Corporation.
(b) Except as otherwise provided herein, or by law, the
Certificate of Incorporation or the Amended and Restated By-laws of the
Corporation (the "By-laws"), the holders of shares of Participating Preferred
Stock and the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(c) If and whenever dividends on the Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividend payments,
then and in such event the holders of the Participating Preferred Stock, voting
separately as a class (subject to the provisions of subparagraph (d) below),
shall be entitled at the next annual meeting of the stockholders or at any
special meeting to elect two (2) directors. Each share of Participating
Preferred Stock shall be entitled to one vote, and holders of fractional shares
shall have the right to a fractional vote. Upon election, such directors shall
become additional directors of the Corporation and the authorized number of
directors of the Corporation shall thereupon be automatically increased by such
number of directors. Such right of the holders of Participating Preferred Stock
to elect directors may be exercised until all dividends in default on the
Participating Preferred Stock shall have been paid in full, and dividends for
the current dividend period declared and funds therefor set apart, and when so
paid and set apart, the right of the holders of Participating
A-4
Preferred Stock to elect such number of directors shall cease, the term of such
directors shall thereupon terminate, and the authorized number of directors of
the Corporation shall thereupon return to the number of authorized directors
otherwise in effect, but subject always to the same provisions for the vesting
of such special voting rights in the case of any such future dividend default or
defaults. The fact that dividends have been paid and set apart as required by
the preceding sentence shall be evidenced by a certificate executed by the
President and the chief financial officer of the Corporation and delivered to
the Board of Directors. The directors so elected by holders of Participating
Preferred Stock shall serve until the certificate described in the preceding
sentence shall have been delivered to the Board of Directors or until their
respective successors shall be elected or appointed and qualify.
At any time when such special voting rights have been so vested in
the holders of the Participating Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders of record of 10% or
more of the number of shares of the Participating Preferred Stock then
outstanding addressed to such Secretary at the principal office of the
Corporation in the State of Illinois, shall, call a special meeting of the
holders of the Participating Preferred Stock for the election of the directors
to be elected by them as hereinabove provided, to be held in the case of such
written request within forty (40) days after delivery of such request, and in
either case to be held at the place and upon the notice provided by law and in
the By-laws of the Corporation for the holding of meetings of stockholders;
provided, however, that the Secretary shall not be required to call such a
special meeting (i) if any such request is received less than ninety (90) days
before the date fixed for the next ensuing annual or special meeting of
stockholders or (ii) if at the time any such request is received, the holders of
Participating Preferred Stock are not entitled to elect such directors by reason
of the occurrence of an event specified in the third sentence of subparagraph
(d) below.
A-5
(d) if, at any time when the holders of Participating
Preferred Stock are entitled to elect directors pursuant to the foregoing
provisions of this paragraph 4, the holders of any one or more additional series
of Preferred Stock are entitled to elect directors by reason of any default or
event specified in the Certificate of Incorporation, as in effect at the time of
the certificate of designation for such series, and if the terms for such other
additional series so permit, the voting rights of the two or more series then
entitled to vote shall be combined (with each series having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Participating Preferred Stock and of all such other
series then entitled so to vote, voting as a class, shall elect such directors.
If the holders of any such other series have elected such directors prior to the
happening of the default or event permitting the holders of Participating
Preferred Stock to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the Corporation
from the holders of not less than 10% of the then outstanding shares of
Participating Preferred Stock, then such directors so previously elected will be
deemed to have been elected by and on behalf of the holders of Participating
Preferred Stock as well as such other series, without prejudice to the right of
the holders of Participating Preferred Stock to vote for directors if such
previously elected directors shall resign, cease to serve or fail to stand for
reelection while the holders of Participating Preferred Stock are entitled to
vote. If the holders of any such other series are entitled to elect in excess of
two (2) directors, the Participating Preferred Stock shall not participate in
the election of more than two (2) such directors, and those directors whose
terms first expire shall be deemed to be the directors elected by the holders of
Participating Preferred Stock; provided that, if at the expiration of such terms
the holders of Participating Preferred Stock are entitled to vote in the
election of directors pursuant to the provisions of this paragraph 4, then the
Secretary of the Corporation shall call a meeting (which meeting may be the
annual meeting or special meeting of stockholders referred to in subparagraph
(c)) of holders of
A-6
Participating Preferred Stock for the purpose of electing replacement directors
(in accordance with the provisions of this paragraph 4) to be held on or prior
to the time of expiration of the expiring terms referred to above.
(e) Except as otherwise set forth herein or required by law,
the Certificate of Incorporation or the By-laws, holders of Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for the taking of any corporate action. No
consent of the holders of outstanding shares of Participating Preferred Stock at
any time outstanding shall be required in order to permit the Board of Directors
to: (i) increase the number of authorized shares of Participating Preferred
Stock or to decrease such number to a number not below the sum of the number of
shares of Participating Preferred Stock then outstanding and the number of
shares with respect to which there are outstanding rights to purchase; or (ii)
to issue Preferred Stock which is senior to the Participating Preferred Stock,
junior to the Participating Preferred Stock or on a parity with the
Participating Preferred Stock.
5. Redemption. The shares of Participating Preferred Stock shall not
be redeemable.
6. Conversion Rights. The Participating Preferred Stock is not
convertible into Common Stock or any other security of the Corporation.
A-7
IN WITNESS WHEREOF, the undersigned
and of the Corporation each declares
under penalty or perjury the truth, to the best of his or her knowledge, of this
Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock.
Executed this day of , 1997 in Chicago, Illinois
By: _____________________________________
Attest:
______________________________
A-8
EXHIBIT B
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER , 2007, OR EARLIER IF REDEEMED BY THE
CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR
ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME
NULL AND VOID.
Right Certificate
NEXTLEVEL SYSTEMS, INC.
This certifies that , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of , 1997 (the "Rights Agreement"), between NextLevel
Systems, Inc., a Delaware corporation (the "Company"), and
, a company (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York, New York time, on , 2007, unless the Rights evidenced hereby shall have
been previously redeemed by the Company, at the principal office or offices of
the Rights Agent designated for such purpose, or at the office of its successor
as Rights Agent, one one-thousandth of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, $.01 par value per share (the
"Preferred Shares"), of the Company, at a purchase price of $[ ].00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a Preferred
Share 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
, based on the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate who becomes a
transferee after the Acquiring Person becomes such, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandths of a Preferred Share or other securities 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,
including Triggering Events (as such term is defined in the Rights Agreement).
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,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the principal office or offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, 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
Preferred Shares or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $.01 per Right
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(subject to adjustment as provided in the Rights Agreement) payable in Common
Shares or cash.
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 as defined in the Rights Agreement.
The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are one one-thousandths or integral multiples
of one one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share). In lieu of fractional Preferred Shares
other than fractions that are multiples of one one-thousandth of a Preferred
Share, the Company will pay to the registered holders of Right Certificates at
the time such Rights are exercised an amount in cash equal to the same fraction
of the current market value of one Preferred Share as defined 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 the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive 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.
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WITNESS the signature of the proper officers of the Company and its
corporate seal. Dated as of _________, ______.
[SEAL]
ATTEST: NEXTLEVEL SYSTEMS, INC.
Attest:
By _________________________________ By ________________________________
Name: Name:
Title: Title:
Countersigned:
By _________________________________
Authorized Signatory
Name:
Title:
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________ Attorney, to transfer
the within Right Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ____________, _____
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank, savings association, credit union or trust
company having an office or correspondent in the United States or other eligible
guarantor institution which is a participant in a signature guarantee medallion
program.
--------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and (2)
after due inquiry and to the best knowledge of the
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undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
________________________________
Signature
--------------------------------------------------------------------------------
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires
to exercise Rights represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares, Common
Shares or such other securities issuable upon the exercise of such Rights at
this time as follows:
Please Insert
Number of Rights
To Be Exercised
(i) Preferred Shares Exercise ________________
(ii) Section 11(a)(ii) Exercise ________________
(iii) Section 13 Exercise ________________
The undersigned requests that certificates for such Preferred
Shares, Common Shares or other securities be issued in the name of:
Please insert social security
or other identifying number ____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
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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 of transferee)
_______________________________________________________________________________
B-7
Form of Reverse Side of Right Certificate -- continued.
--------------------------------------------------------------------------------
Dated: , 19
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank, savings association, credit union or trust
company having an office or correspondent in the United States or other eligible
guarantor institution which is a participant in a signature guarantee medallion
program.
B-8
Form of Reverse Side of Right Certificate -- continued.
--------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due inquiry and to the
best knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
________________________________
Signature
--------------------------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment and Election and
certificates 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.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the Beneficial Owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.
B-9
EXHIBIT C
, 1997
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
The Board of Directors of NextLevel Systems, Inc., a Delaware
corporation (the "Company"), declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock, par value $.01 per
share (the "Common Shares"), of the Company. The dividend is payable to the
stockholders of record as of 5:00 P.M., New York, New York time, on _________,
1997 (the "Record Date"), and with respect to Common Shares issued thereafter
until the Distribution Date (as hereinafter defined) and, in certain
circumstances, with respect to Common Shares issued after the Distribution Date.
Except as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Company one one-thousandth of a share of
Series A Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), at a price of $[ ].00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of __________, 1997 (the
"Rights Agreement"), between the Company and
(the "Rights Agent").
The Rights are attached to all certificates representing outstanding
Common Shares, and no separate Right Certificates (as hereinafter defined) have
been distributed. The Rights will separate from the Common Shares on the
earliest to occur of (i) the first date of public announcement that a person or
"group" (other than FLC Entities (as hereinafter defined) to the extent FLC
Entities, individually or as a group, beneficially own no more than 20% of the
then outstanding Common Shares) has acquired beneficial ownership of 15% or more
of the outstanding Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) ten (10) business days (or such later date as the
Board of Directors of the Company may determine) following the commencement of,
or announcement of an intention to commence, a tender offer or exchange offer
the consummation of which would result in a person or group becoming an
Acquiring Person (as hereinafter defined) (the earliest of such dates being
called the "Distribution Date"). A person or group whose acquisition of Common
Shares causes a Distribution Date pursuant to clause (i) above is an "Acquiring
Person". The first date of public announcement that a person or group has become
an Acquiring Person is the "Shares Acquisition Date". "FLC Entities" means
Instrument Partners, a New York limited partnership, Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-IV, a New York
limited partnership, Xxxxxxxx X. Xxxxxxxxx, Xxxxxxxx X. Xxxxxxxxx, Xx. Xxxxx
Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxx and their Affiliates and Associates who or which are considered as one
Person and references to the FLC Entities include any or all such persons.
The Rights Agreement provides that until the Distribution Date the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares have contained
C-2
and will continue to contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued after the
Distribution Date), and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M., New York, New York time, on , 2007, unless earlier
redeemed by the Company as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a Permitted Offer as hereinafter defined), each holder of a Right
will have (subject to the terms of the Rights Agreement) the right (the "Flip-In
Right") to receive upon exercise the number of Common Shares, or, in the
discretion of the Board of Directors of the Company, the number of one
one-thousandths of a Preferred Share (or, in certain circumstances, other
securities of the Company) having a value (immediately prior to such triggering
event) equal to two times the Purchase Price. Notwithstanding the foregoing,
following the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void. A "Permitted Offer" is a tender or exchange offer for all
outstanding Common Shares which is at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by a majority of
Disinterested Directors (as hereinafter defined)
C-3
to be adequate (taking into account all factors that such Disinterested
Directors deem relevant) and otherwise in the best interests of the Company and
its stockholders (other than the person or any affiliate or associate thereof on
whose basis the offer is being made) taking into account all factors that such
Disinterested Directors may deem relevant. "Disinterested Directors" are
directors of the Company who are not officers of the Company and who are not
Acquiring Persons or affiliates or associates thereof, or representatives of any
of them, or any person who was directly or indirectly proposed or nominated as a
director of the Company by a Transaction Person (as defined in the Rights
Agreement).
In the event that, at any time following the Shares Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Company's assets or earning power is sold or transferred, in either case with or
to an Acquiring Person or any affiliate or associate thereof, or any other
person in which such Acquiring Person, affiliate or associate has an interest,
or any person acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of Common Shares
are not treated alike, any other person, then each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right (the "Flip-Over Right") to receive, upon exercise, common shares
of the acquiring company having a value equal to two times the Purchase Price.
The holder of a Right will continue to have the Flip-Over Right whether or not
such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of one-thousandths of a
Preferred Share or other securities issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or
C-4
a subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon the grant to holders of the Preferred Shares of certain rights or warrants
to subscribe for or purchase Preferred Shares at a price, or securities
convertible into Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The Purchase Price is also subject to adjustment in the event of a
stock split of the Common Shares, or a stock dividend on the Common Shares
payable in Common Shares, or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional one-thousandths of a Preferred Share will be
issued, and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 1,000 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $100.00,
provided that they will be entitled to an aggregate payment per share of at
least 1,000 times the aggregate payment made per Common Share. Each Preferred
Share will have one thousand votes, voting together with the Common Shares.
These rights are protected by customary antidilution provisions. In
C-5
the event that the amount of accrued and unpaid dividends on the Preferred
Shares is equivalent to at least six full quarterly dividends, the holders of
the Preferred Shares shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of the Common
Shares until all dividends in default on the Preferred Shares have been paid in
full and dividends for the current dividend period declared and funds therefor
set apart.
At any time prior to the earlier to occur of (i) a person becoming
an Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors of the Company. Additionally, the Company may redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price after the
triggering of the Flip-In Right and before the expiration of any period during
which the Flip-In Right may be exercised in connection with a merger or other
business combination transaction or series of transactions involving the Company
in which all holders of Common Shares are treated alike but not involving an
Interested Stockholder (as defined in the Rights Agreement). Upon the effective
date of the redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Company, stockholders may, depending upon
the circumstances, recognize taxable income should the Rights become exercisable
or upon the occurrence of certain events thereafter.
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