EXHIBIT 4.2
GSC HOLDINGS CORP.
(TO BE RENAMED GAMESTOP CORP.)
THE BANK OF NEW YORK
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JUNE 27, 2005
TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions.......................................................1
Section 2. Appointment of Rights Agent...............................................4
Section 3. Issue of Right Certificates...............................................4
Section 4. Form of Right Certificates................................................6
Section 5. Countersignature and Registration.........................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates..............................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............7
Section 8. Cancellation of Right Certificates........................................8
Section 9. Status and Availability of Preferred Stock................................8
Section 10. Preferred Stock Record Date...............................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights........9
Section 12. Certificate of Adjustment................................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power....................................................................16
Section 14. Fractional Rights and Fractional Shares..................................16
Section 15. Rights of Action.........................................................17
Section 16. Agreement of Right Holders...............................................17
Section 17. Right Certificate Holder Not Deemed a Stockholder........................18
Section 18. Concerning the Rights Agent..............................................18
Section 19. Merger or Consolidation or Change of Name of Rights Agent................19
Section 20. Duties of Rights Agent...................................................19
Section 21. Change of Rights Agent...................................................21
Section 22. Issuance of New Right Certificates.......................................21
Section 23. Redemption...............................................................22
Section 24. Exchange.................................................................22
Section 25. Notice of Certain Events.................................................23
Section 26. Notices..................................................................24
Section 27. Supplements and Amendments...............................................24
Section 28. Successors...............................................................25
Section 29. Benefits of this Rights Agreement........................................25
Section 30. Severability.............................................................25
Section 31. Governing Law............................................................25
Section 32. Counterparts.............................................................25
Section 33. Descriptive Headings.....................................................25
Section 34. Administration...........................................................25
EXHIBIT A -- Form of Right Certificate
EXHIBIT B -- Form of Summary of Rights
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RIGHTS AGREEMENT
This Rights Agreement dated as of June 27, 2005 (the "Record
Date"), between GSC Holdings Corp., a Delaware corporation (to be renamed
GameStop Corp.) (the "Company"), and The Bank of New York (the "Rights
Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and directed the issuance of one right (a "Right") for each share of
Class A Common Stock, par value $.001 per share, of the Company ("Class A
Shares"), and each share of Class B Common Stock, par value $.001 per share, of
the Company ("Class B Shares"), that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date (each capitalized term as hereinafter defined), each Right
representing the right to purchase, upon the terms and subject to the conditions
set forth herein, one one-thousandth of a share of the Company's Series A Junior
Participating Preferred Stock, $.001 par value per share (the "Preferred
Stock"), having the rights, powers and preferences set forth in the Company's
Amended and Restated Certificate of Incorporation, as amended from time to time
(the Class A Shares and Class B Shares are referred to, collectively, as the
"Common Shares"). This Rights Agreement shall become effective immediately prior
to the Effective Time (as such term is defined in the Agreement and Plan of
Merger, dated April 17, 2005, by and among the Company, GameStop Corp.,
GameStop, Inc., Eagle Subsidiary LLC, Cowboy Subsidiary LLC and Electronics
Boutique Holdings Corp. (the "Merger Agreement")).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, without the prior approval of the
Board of Directors, shall after the date hereof become the Beneficial Owner of
Common Shares representing 15% or more of the Voting Power of the Common Shares
of the Company then outstanding, but shall not include each of the following:
(A) the Company; (B) any Subsidiary of the Company; (C) any employee benefit
plan of the Company or any Subsidiary of the Company; (D) any Person holding
Common Shares for or pursuant to the terms of any such plan; (E) any Person (an
"Excluded Person") who would as of the Close of Business on the date hereof be
deemed to be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph, unless and until such Excluded Person, without the
prior approval of the Board of Directors, shall after the date hereof acquire in
one or more transactions, other than upon the exercise of any options granted
prior to or after the date hereof to such Excluded Person under the Company's
Amended and Restated 2001 Incentive Plan and 2005 Incentive Plan (as such plans
may be amended or supplemented from time to time) or any other employee benefit
plan of the Company, additional Common Shares aggregating 5% or more of Voting
Power of the Common Shares then outstanding; and (F) any Person who is an
immediate family member of an Excluded Person and any trust for the benefit of
such immediate family member or such Excluded Person, which Person or trust
acquires from such Excluded Person Common Shares (such Common Shares, "Excluded
Shares") and any executor or trustee for the estate of an Excluded Person,
unless and until such Person, trust or executor, together with all Affiliates
and Associates of such Person, trust or executor, shall become the Beneficial
Owner of 15% or more of the Common Shares not including Excluded Shares.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Company which, by
reducing the number or Voting Power of shares outstanding, increases the Voting
Power of the shares beneficially owned by such Person to 15% or more of the
Voting Power of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall so become
the Beneficial Owner of Common Shares representing 15% or more of the Voting
Power of the Common Shares of the Company then outstanding by reason of the
acquisition of Common Shares by the Company and, without the prior approval of
the Board of Directors, shall, after such share purchases by the Company,
purchase or otherwise take action to cause such Person to become the Beneficial
Owner of any additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person", (ii) no Person shall become an "Acquiring
Person" as a result of the acquisition from time to time of all of his, her or
its Common Shares in a merger, consolidation or other combination of the Company
(including, without limitation, the mergers contemplated by the Merger
Agreement) with or into another Person if such merger, consolidation or other
combination was approved by the Board of Directors, provided, however, that if
after any such acquisition of Common Shares such Person, without the prior
approval of the Board of Directors, shall acquire in one or more transactions
additional Common Shares aggregating 5% or more of the Voting Power of the
Company then outstanding and after such acquisition, such Person, together with
all Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the Voting Power of the Company then outstanding, then as of the date of
the acquisition of such additional Common Shares aggregating 5% or more, such
Person shall be deemed to be an "Acquiring Person" for any purpose of this
Rights Agreement, (iii) if the Board of Directors determines in good faith that
a Person who would otherwise be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this paragraph, has become such inadvertently, and
such Person divests, as promptly as practicable, a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph, then such Person shall
not be deemed to have become an "Acquiring Person" for any and all purposes of
this Rights Agreement, and (iv) any Excluded Person who after the Close of
Business on the date hereof becomes the Beneficial Owner of less than 15% of the
Common Shares of the Company then outstanding shall cease to be an Excluded
Person.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Rights Agreement.
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 (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), written or otherwise, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed to
be the Beneficial Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act 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
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(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities), written or otherwise, for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to section (B) of the immediately preceding paragraph (ii)) or disposing
of any securities of the Company or with respect to any of the matters relating
to the Company referred to in Item 4 of Schedule 13D under the Exchange Act.
Notwithstanding anything in this definition of "beneficial
ownership" 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.
"Board of Directors" shall have the meaning set forth in the
introductory paragraph of this Rights Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.
"Common Shares" when used with reference to the Company shall have
the meaning set forth in the second paragraph of this Rights Agreement. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
"Distribution Date" shall have the meaning set forth in Section 3
hereof.
"equivalent preferred stock" shall have the meaning set forth in
Section 11(b).
"Exchange Ratio" shall have the meaning set forth in Section 24(a).
"Final Expiration Date" shall mean October 28, 2014.
"Person" shall mean any individual, firm, corporation, partnership,
limited partnership, limited liability partnership, business trust, limited
liability company, unincorporated association or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"preferred stock equivalents" shall have the meaning set forth in
Section 11(a)(iii)(B)(3).
"Purchase Price" shall have the meaning set forth in Section 7(b).
"Redemption Date" shall mean the date on which the Rights are
redeemed as provided in Section 23 hereof.
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"Required Board Vote" shall mean approval of an action by the Board
of Directors by the affirmative vote of two-thirds of the members of the Board
of Directors voting on the action.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form of Exhibit A hereto.
"Shares Acquisition Date" shall mean the earlier of the date of (i)
the public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or (ii) the public disclosure of facts by the Company or
an Acquiring Person indicating that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section
11(a)(iii)(A)(2) hereof.
"Subsidiary" of any Person shall mean any 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.
"Summary of Rights" shall mean the Summary of Rights to Purchase
Shares of Preferred Stock in substantially the form of Exhibit B hereto.
"Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Trigger Date" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Trigger Date Value" shall have the meaning set forth in Section
11(a)(iii)(A)(1) hereof.
"Voting Power" shall mean the total number of votes entitled to be
cast by the holders of the Common Shares of the Company then outstanding.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent. In the event
the Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agents and any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or
(ii) the tenth Business Day (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person becomes an Acquiring
Person) 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 entity holding Common Shares 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 any of the Persons referred to in the
preceding parenthetical) to commence a tender or exchange offer the consummation
of which would result in any Person becoming the Beneficial Owner of Common
Shares aggregating 15% or more of the Voting Power of the then outstanding
Common Shares (including any such date which is after the date of this Rights
Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the
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names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the Rights
(and the right to receive Right Certificates) will be transferable only in
connection with the transfer of Common Shares. The Company shall give the Rights
Agent prompt written notice of the Distribution Date. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one Right for each Common Share so held.
As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) With respect to certificates for Common Shares outstanding
as of the Record Date, until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration 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
shall also constitute the transfer of the Rights associated with the Common
Shares evidenced thereby. Upon the request of the holder of any Common Shares
or, after the Distribution Date, the holder of any Right, the Company shall, at
its expense, provide a copy of the Summary of Rights.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date, but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date,
shall have impressed, printed, stamped, written or otherwise affixed onto them
the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights (the "Rights") as set forth in the Rights Agreement
between GameStop Corp. (formerly GSC Holdings Corp.) and The Bank of
New York, dated as of June 27, 2005, as it may from time to time be
amended or supplemented pursuant to its terms (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference. A copy of the Rights Agreement is on file at the
principal executive offices of GameStop Corp. Under certain
circumstances set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced
by this certificate. GameStop Corp. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in Section
11(a)(ii) of the Rights Agreement, Rights beneficially owned by any
Person who becomes an Acquiring Person (as defined in the Rights
Agreement) and certain other Persons shall 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
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 Certificates. The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The Right Certificates
shall be in machine printable format. Subject to the other provisions of this
Rights Agreement, the Right Certificates shall show the date of countersignature
and shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth therein at
the Purchase Price, but the number of such shares and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman, its Chief Executive
Officer, its Chief Operating Officer, its President, its Chief Financial
Officer, any of its Vice Presidents or its Secretary, 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 any 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, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its designated office, books for registration of the transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) 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 share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the designated office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment by the holders of Right
Certificates of a sum sufficient for any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. Neither the Rights
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Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have duly completed and executed the form of assignment
on the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or such former or
proposed Beneficial Owner) thereof or such Beneficial Owner's Affiliates or
Associates as the Company shall reasonably request.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate (other than
a holder whose Rights have become void pursuant to Section 11(a)(ii) hereof or
have been exchanged pursuant to Section 24 hereof), may exercise the Rights
evidenced thereby 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
on the reverse side thereof duly executed, to the Rights Agent at its designated
office, together with payment of the Purchase Price for each one one-thousandth
of a share of Preferred Stock as to which the Rights are exercised, at or prior
to the earliest of (i) the Close of Business on the Final Expiration Date, (ii)
the Redemption Date, or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The purchase price for each one one-thousandth of a share
of Preferred Stock to be purchased upon the exercise of a Right shall initially
be $100.00 (the "Purchase Price"), shall be subject to adjustment from time to
time as provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and related
certification duly executed, accompanied by payment of the Purchase Price for
the number of shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by cash, 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 shares of
Preferred Stock certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from any depositary agent for
the shares of Preferred Stock depositary receipts representing such number of
one one-thousandth of a share of Preferred Stock as are to be purchased (in
which case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares of Preferred Stock in accordance
with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, deliver such
cash to or upon the order of the registered holder of such Right Certificate.
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(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing the unexercised Rights shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 6 and Section 14 hereof.
(e) Notwithstanding anything in this Rights 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 following the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company.
Section 9. Status and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and non-assessable shares.
(b) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock 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 shares of Preferred Stock 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 shares of
Preferred Stock 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.
(c) The Company covenants and agrees that it will cause to be
reserved and kept available, out of its authorized and unissued shares of
Preferred Stock, or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with Section
7 hereof.
(d) So long as the shares of Preferred Stock issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
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(e) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of an
event set forth in Section 11(a)(ii) on which the consideration to be delivered
by the Company upon exercise of the Rights has been determined in accordance
with Section 11(a)(iii) hereof, a registration statement under the Securities
Act of 1933 (the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the Final Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(e), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement, and shall deliver to
the Rights Agent a statement, stating that the exercisability of the Rights has
been temporarily suspended. At such time as the suspension is no longer in
effect, the Company shall make another public announcement, and shall deliver to
the Rights Agent a statement so stating. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law or a registration statement
shall not have been declared effective. Absent written notification from the
Company to the Rights Agent to the contrary, the Rights Agent may assume that
any Right exercised is permitted to be exercised under applicable law and,
except as otherwise provided hereunder in the case of the Rights Agent's gross
negligence or willful misconduct, the Rights Agent shall have no liability for
acting in reliance upon such assumption.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate shall
be dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
shares of Preferred Stock for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of shares of Preferred Stock covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare a dividend on the Preferred Stock
payable in shares or fractional units of shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), 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
9
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, he 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 Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to the following paragraph of this subparagraph
(ii) and to Section 24 of this Rights Agreement, in the event any Person, alone
or together with its Affiliates or Associates, shall become an Acquiring Person,
each holder of a Right shall thereafter 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 Rights Agreement, such number of one one-thousandths of a
share of Preferred Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the then current market
price per one one-thousandth of a share of Preferred Stock (determined pursuant
to Section 11(d) hereof) on the date such Person became an Acquiring Person. In
the event that any Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action which would eliminate
or diminish the benefits intended to be afforded by the Rights. From and after
the date any Person, alone or together with its Affiliates and Associates, shall
become an Acquiring Person, any Rights that are or were acquired or beneficially
owned by such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this Rights Agreement. No
Right Certificate shall be issued pursuant to this Rights Agreement that
represents Rights beneficially owned by an Acquiring Person (or any Associate or
Affiliate thereof) whose Rights would be void pursuant to the preceding
sentence; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person (or any Associate or Affiliate thereof) whose
Rights would be void pursuant to the preceding sentence or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person (or any
Associate or Affiliate thereof) whose Rights would be void pursuant to the
preceding sentence shall be canceled.
(iii) In the event that the number of shares of Preferred
Stock which are authorized by the Company's certificate of incorporation and not
outstanding or subscribed for, or reserved or otherwise committed for issuance
for purposes other than upon exercise of the Rights, are not sufficient to
permit the holder of each Right to purchase the number of shares of Preferred
Stock to which he would be entitled upon the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of paragraph (a) of this Section
11, or should the Board of Directors so elect, the Company shall: (A) determine
the excess of (1) the value of the Preferred Stock issuable upon the exercise of
a Right (calculated as provided in the last sentence of this subparagraph (iii))
pursuant to Section 11(a)(ii) hereof (the "Trigger Date Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each Right,
make adequate provision to substitute for such shares of Preferred Stock, upon
payment of the applicable Purchase Price, any one or more of the following
having an aggregate value determined by the Board of Directors to be equal to
the Trigger Date Value: (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including, without
limitation, shares or units of shares of preferred stock which the Board of
Directors has determined to have the same value as the Preferred Stock (such
shares of preferred stock, "preferred stock equivalents")), (4) debt securities
of the Company, or (5) other assets; provided, however, if the Company shall not
have made adequate provision to deliver the Trigger Date Value pursuant to
clause (B) above within thirty (30) days following
10
the first occurrence of an event triggering the rights to purchase shares of
Preferred Stock described in Section 11(a)(ii) (the "Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Preferred
Stock (to the extent available) and then, if necessary, cash, which shares and
cash have an aggregate value equal to the Spread. If the Board of Directors
shall determine in good faith that it is likely that sufficient additional
shares of Preferred Stock could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii) ,
the Company (x) shall provide, subject to Section 7(e) hereof and the last
paragraph of Section 11(a)(ii) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall make a
public announcement, and shall deliver to the Rights Agent a statement, stating
that the exercisability of the Rights has been temporarily suspended. At such
time as the suspension is no longer in effect, the Company shall make another
public announcement, and deliver to the Rights Agent a statement, so stating.
For purposes of this Section 11(a)(iii), the Trigger Date Value of the Preferred
Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Preferred Stock on the Trigger Date and the value of
any preferred stock equivalent shall be deemed to have the same value as the
Preferred Stock on such date. The Board of Directors may, but shall not be
required to, establish procedures to allocate the right to receive Preferred
Stock, equivalent preferred stock, Common Shares and cash upon the exercise of
the Rights among the holders of the Rights.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less than the
then current market price per share of the Preferred Stock (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be adjusted by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or equivalent preferred
stock so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible); 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. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options
11
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) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current
market price per share of the Preferred Stock (as determined in Section 11(d))
on such record date, less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preferred Stock and the denominator of which shall be
such current market price per share of the Preferred Stock; 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 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 market price" of any security (a "Security") for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current market price per share 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 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 market price per
share shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the 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 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 making a market in the Security selected by the
Board of Directors. If on any such date no market maker is making a market in
the Security, the fair value of such shares on such date as determined
reasonably and with good faith by the Board of Directors shall be used and shall
be binding on the Rights Agent. 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. If the Security is not publicly listed or traded, "current market
price" shall mean the fair value per share as determined in
12
good faith by the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current market price" of the Preferred Stock shall be determined in accordance
with the method set forth in Section 11(d)(i) (other than the last sentence
thereof). If the current market price per share (or one one-thousandth of a
share) of Preferred Stock cannot be determined in the manner provided above or
if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such number may be adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Preferred Stock occurring
after the date of this Rights Agreement) multiplied by the current market price
per share of the Class B Shares (as determined pursuant to clause (i) above),
and the "current market price" per one one-thousandth of a share of Preferred
Stock shall be equal to the current market price per share of the Class B Shares
(as appropriately adjusted). If neither the Class B Shares or Preferred Stock is
publicly held or so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one millionth of
a share of Preferred Stock, or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than three
years from the date of the transaction which requires such adjustment.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than shares of
Preferred Stock, the number of such other shares so receivable upon exercise of
any Right shall thereafter 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 shares of Preferred Stock contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
millionth) obtained by (i) multiplying (x) the number of one one-thousandths of
a share of Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
13
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights in substitution
for any adjustment in the number of one one-thousandths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been distributed, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
distributed, 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 to be so 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 share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-thousandths of a share of Preferred Stock 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 one one-thousandth of the then par value of
the Preferred Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such 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) combination, consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the current market price, (iii)
14
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, (iv) dividends on
Preferred Stock payable in Preferred Stock or (v) issuance of any rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Rights Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the date
of this Rights Agreement and prior to the Distribution Date (i) declare or pay a
dividend on the outstanding Common Shares, (ii) subdivide the outstanding Common
Shares, (iii) combine or consolidate the outstanding Common Shares into a
smaller number of shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Shares, then in any such case (x) the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which shall be the Voting
Power of the total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the Voting Power
of the total number of Common Shares outstanding immediately following the
occurrence of such event, and (y) each Common Share outstanding immediately
following the occurrence of such event, without further action by the Company or
any other Person, shall evidence that number of Rights which each Common Share
outstanding immediately prior to such event had evidenced. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, consolidation or
reclassification is effected.
(o) Notwithstanding any other provision of this Rights
Agreement, no adjustment to the Purchase Price, the number of shares (or
fractions of a share) of Preferred Stock, Common Shares or other securities for
which a Right is exercisable or the number of Rights outstanding or any similar
adjustment shall be made or be effective if such adjustment would have the
effect of reducing or limiting the benefits the holders of Rights would have had
absent such adjustment, including, without limitation, the benefits under
Section 11(a)(ii) and Section 13, unless the terms of this Rights Agreement are
amended so as to preserve such benefits.
(p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including, without limitation, the rights represented by
Section 13.
Section 12. Certificate of Adjustment. Whenever an adjustment is
made as provided in Sections 11 and 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 Preferred Stock a copy of such certificate and
(c) if such adjustment occurs following a Distribution Date, mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 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. In the event that, at any time after the Distribution Date,
directly or indirectly, (a) the Company shall consolidate with, or merge with
and into, any other Person, (b) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Shares shall
15
be changed into or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property, (c) the Company shall, directly
or indirectly, effect a share exchange in which all or part of the Common Shares
shall be exchanged (including, without limitation, any conversion into or
exchange for securities of any other Person, cash or any other property), (d)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (i) each holder of a Right
(except as otherwise provided herein) 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 Rights Agreement and in lieu of such
number of shares of Preferred Stock for which a Right is then exercisable, such
number of Common Shares of such other Person (including the Company as successor
thereto or as the surviving corporation) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (B) 50% of the then current market
price per share of the Class B Shares of such other Person (determined pursuant
to Section 11(d) hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii) the issuer of such Common Shares shall thereafter
be liable for, and shall assume, by virtue of such consolidation, merger, sale
or transfer, all the obligations and duties of the Company pursuant to this
Rights Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such issuer; and (iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to 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. The Company covenants and agrees
that it shall not consummate any such consolidation, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement so providing. The Company shall not
enter into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the 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,
16
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
of Directors shall be used and shall be binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company shall pay to each registered holder 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 one-thousandth of a share of
Preferred Stock. For the purposes of this Section 14(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives any right to receive fractional Rights or fractional shares
upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Rights 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) may, 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), on 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 Rights 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 Rights 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 Rights Agreement. Holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred by them in
any action to enforce the provisions of this Rights Agreement in which they
successfully prosecute their claims.
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 maintained by the Rights Agent if
surrendered at the designated office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer with a completed form of
certification;
(c) 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
17
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Rights 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, that 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 Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby nor shall anything contained herein
or in any 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
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 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 such compensation as shall be agreed to in writing between
the Company and the Rights Agent for all services rendered by it hereunder and
its reasonable expenses incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence 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
Rights Agreement, including the costs and expenses (including reasonable
attorneys' fees and expenses) of defending against any claim of liability
arising therefrom. The indemnity provided for in this Section 18 shall survive
the expiration of the Rights and the termination of this Rights Agreement.
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 Rights 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 and executed by
the proper Person or Persons, and verified or acknowledged, where necessary.
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 all or
substantially all of the stock transfer or corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights Agreement without the execution or filing of
18
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 Rights
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this Rights
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; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Rights 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, and no implied
duties or obligations shall be read into this Rights Agreement against the
Rights Agent:
(a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer,
the President, the Chief Financial Officer, any Vice President or the 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 Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence or willful misconduct;
provided, however, that in no event shall the Rights Agent be liable for
indirect, consequential, punitive or special damages.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignatures thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or
19
condition contained in this Rights Agreement or in any Rights Certificate; nor
shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Stock to be issued pursuant to this Rights Agreement or any Rights
Certificate or as to whether any Preferred Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable; nor shall the Rights Agent
be responsible for the legality of the terms hereof in its capacity as an
administrative agent.
(f) The Company agrees that it will inform the Rights Agent
promptly upon its determination that a Person has become an Acquiring Person and
the Rights Agent will not be responsible for determining the status of a Person
as an Acquiring Person prior to such notification, except as such status may be
indicated in the Assignment or Election to Purchase of a Rights Certificate. The
Company also 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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman, the Chief Executive Officer, the Chief Operating
Officer, the President, the Chief Financial Officer, any Vice President or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Rights Agreement and the date on and/or after
which such action shall be taken or omitted and the Rights Agent shall not be
liable for any action taken or omitted in accordance with a proposal included in
any such application on or after the date specified therein (which date shall
not be less than three business days after the date any such officer actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking or omitting any such action,
the Rights Agent has received written instructions in response to such
application specifying the action to be taken or omitted.
(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 Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Rights 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
20
duties hereunder or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) The Company agrees to give the Rights Agent prompt written
notice of any event or ownership known to the Company which would prohibit the
exercise or transfer of the Right Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Stock by registered or certified mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the Rights Agent or the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (i) a corporation organized and
doing business under the laws of the United States or of the State of New York
(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, in
good standing, having an office in the State of New York, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million dollars or (ii) a subsidiary of a corporation
described in clause (i) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing
to the registered holders of the Right Certificates, at the Company's expense.
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 Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Board of Directors may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights
21
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors may be made
effective at such time (or such later time as the Board of Directors may
establish for the effectiveness of the Redemption), on such basis and subject to
such conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of the Redemption), 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.
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 10 days after such action of the
Board of Directors ordering the redemption of the Rights pursuant to paragraph
(a), the Company shall mail a notice of redemption to the Rights Agent and 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. If the payment of the Redemption
Price is not included with such notice, each such notice shall state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, or other than in connection
with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time
after 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 Section 11(a)(ii) hereof) for shares
of Preferred Stock or Common Shares at an exchange ratio of one one-thousandth
of a share of Preferred Stock or one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors 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 of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of Common Shares representing a majority of the Voting Power then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 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 shares of Preferred Stock or 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 promptly
shall mail a notice of any such exchange to the Rights Agent and 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
shares of Preferred Stock or
22
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 Section 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 stock equivalents or Common Shares for
shares of Preferred Stock exchangeable for Rights, at the initial rate of one
preferred stock equivalent or one Common Share for each one one-thousandth of a
share of Preferred Stock, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof.
(d) In the event that there shall not be sufficient shares of
Preferred Stock, preferred stock equivalents or Common Shares authorized by the
Company's certificate of incorporation and not outstanding or subscribed for, or
reserved or otherwise committed for issuance for purposes other than upon
exercise of Rights, to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may
be necessary to authorize additional shares of Preferred Stock or preferred
stock equivalents or Common Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Preferred Stock or Common Shares or to distribute certificates which
evidence fractional shares of Preferred Stock or Common Shares, other than as
provided in Section 14(b) of this Rights Agreement. In lieu of such fractional
shares of Preferred Stock or Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Preferred Stock or Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value per share of a whole share of Preferred Stock or a whole Common Share, as
the case may be. For the purposes of this paragraph (e), the current per share
market value of a whole share of Preferred Stock or a whole Common Share shall
be the closing price of a share of Preferred Stock or a Common Share, as the
case may be, (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall after the Distribution Date
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Preferred Stock payable
in shares of Preferred Stock or to effect a subdivision, combination or
consolidation of the Preferred Stock (by reclassification or otherwise than by
payment of dividends in shares of Preferred Stock), then, in each such case, the
Company shall give to the Rights Agent and each holder of a Right Certificate,
in accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Preferred Stock, if any such date is
23
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Stock, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
the Rights Agent and 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.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
GSC Holdings Corp.
(to be renamed GameStop Corp.)
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 00000
Attn: Director of Investor Relations
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Bank of New York
Shareholder Relations
Department 11E
P.O. Box 00000
Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may, by the
Required Board Vote, from time to time, and the Rights Agent shall, if the
Company so directs, supplement or amend this Rights Agreement without the
approval of any holders of Right Certificates in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any change to or
delete any provision hereof or to adopt any other provisions with respect to the
Rights which the Company may deem necessary or desirable. Any such supplement or
amendment will be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Rights Agreement shall not be amended or supplemented in
any manner which would adversely affect the interests of the holders of Rights
(other than an Acquiring Person and its Affiliates and Associates). Prior to the
Distribution Date, the interests of the holders of Rights shall be
24
deemed coincident with the interests of the holders of Common Shares. 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,
and such supplement or amendment shall be effective regardless of whether or
when executed by the Rights Agent. Notwithstanding any other provision hereof,
the Rights Agent's consent must be obtained regarding any supplement or
amendment pursuant to this Section 27 which alters the Rights Agent's rights or
duties.
Section 28. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Rights Agreement; but this Rights
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).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, provided, however, that the
rights, protections and immunities of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York. The parties
agree that all actions and proceedings arising out of this Rights Agreement or
any of the transactions contemplated hereby, shall be brought in the United
States District Court for the Southern District of New York or in a New York
State Court in the County of New York and that, in connection with any such
action or proceeding, they each submit to the jurisdiction of, and venue in,
such court. Each of the parties hereto also irrevocably waives all right to a
trial by jury in any action, proceeding or counterclaim arising out of this
Rights Agreement or the transactions contemplated hereby.
Section 32. Counterparts. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Administration. The Board of Directors shall have the
exclusive power and authority to (i) administer and interpret the provisions of
this Rights Agreement, (ii) exercise all rights and powers specifically granted
to the Board of Directors or the Company or as may be deemed necessary or
advisable in the administration of this Rights Agreement, and (iii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement, including, without limitation, a determination to redeem or
not redeem the Rights or to amend this Rights Agreement and
25
whether any proposed amendment adversely affects the interests of the holders of
Right Certificates. All such actions, calculations, determinations and
interpretations which are done or made by the Board of Directors in good faith
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and shall not subject the Board of
Directors to any liability to the holders of the Rights or holders of Common
Shares.
[Remainder of Page Intentionally Blank]
26
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
GSC HOLDINGS CORP. (to be renamed
GameStop Corp.)
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
THE BANK OF NEW YORK, as Rights Agent
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Assistant Vice President
27
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R- _____________ Rights
NOT EXERCISABLE AFTER OCTOBER 28, 2014 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR ANY ASSOCIATES OR AFFILIATES THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
This certifies that_______________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of June 27, 2005 (the "Rights Agreement"),
between GSC Holdings Corp., a Delaware corporation (to be renamed GameStop
Corp.) (the "Company"), and The Bank of New York (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 City time,
on October 28, 2014, at the designated office of the Rights Agent, 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, par value
$.001 per share (the "Preferred Stock"), of the Company, at a purchase price of
$100.00 per one one-thousandth of a share of Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
certification and 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 share of Preferred Stock which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of _____, ____, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a share of Preferred Stock 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.
From and after the occurrence of any of the events described in
Section 11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are or were at any time on or after the earlier of (x) the Shares
Acquisition Date (as such term is defined in the Rights Agreement) and (y) the
Distribution Date (as such term is defined in the Rights Agreement) beneficially
owned by an Acquiring Person or an Associate or Affiliate of an Acquiring Person
(as such terms are defined in the Rights Agreement), such Rights shall become
null and void, and any holder of such Rights shall thereafter have no right to
exercise such Rights.
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. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at 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
shares of Preferred Stock 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 (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged in whole or in part for
Preferred Stock.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 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.
2
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ______, ____.
GSC HOLDINGS CORP. (to be renamed
GameStop Corp.)
Attest:
________________________________ By: ___________________________________
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK
Rights Agent
By:_____________________________
Authorized Signatory
Date of Countersignature:
3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto ______________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:_____________________, _____
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Rights Agent, which requirements include
membership or participation in STAMP or such other "signature guarantee program"
as may be determined by the Rights Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Signature
4
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To _____________________________:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares of Preferred Stock be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________, ____
Signature
5
Form of Reverse Side of Right Certificate--continued
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Rights Agent, which requirements include
membership or participation in STAMP or such other "signature guarantee program"
as may be determined by the Rights Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Signature
--------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election 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.
6
EXHIBIT B
SUMMARY OF RIGHTS
TO PURCHASE PREFERRED STOCK
On June 27, 2005, the Board of Directors of the Company (the "Board
of Directors") authorized and directed the issuance of one right (a "Right") for
each outstanding share of Class A Common Stock, par value $.001 per share, of
the Company ("Class A Shares"), and each outstanding share of Class B Common
Stock, par value $.001 per share, of the Company ("Class B Shares" and together
with the Class B Shares, the "Common Shares"), that shall become outstanding
between June 27, 2005 (the "Record Date") and the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date (each capitalized term as
hereinafter defined). Each Right entitles the registered holder to purchase from
the Company one one-thousandth of a share of a series of preferred stock,
designated as Series A Junior Participating Preferred Stock, par value $.001 per
share (the "Preferred Stock") at a price of $100.00 per one one-thousandth of a
share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and The Bank of New York, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) a public announcement that,
without the prior consent of the Board of Directors, a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the Voting Power of the outstanding Common Shares
(or an additional 5% or more of the Voting Power of the outstanding Common
Shares in the case of any Acquiring Person who beneficially owns 15% or more of
the Voting Power of the outstanding Common Shares as of the Record Date) or (ii)
10 business days (or such later date as may be determined by action of the Board
of Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the Voting Power of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate.
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, will 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 such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 28, 2014 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed by
the Company, in each case, as described below.
The Purchase Price payable, and the number of one one-thousandth
shares of Preferred Stock or other securities or property 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 a subdivision, combination
or reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain
rights or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights associated with each Common Share
and the voting and economic rights of each one one-thousandth of a share of
Preferred Stock issuable upon exercise of each Right are 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.
In the event that any person becomes an Acquiring Person, each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
and its Affiliates and Associates (which will thereafter be null and void), will
thereafter have the right to receive upon exercise of the Right and payment of
then current Purchase Price that number of one one-thousandths of a share of
Preferred Stock having a market value of two times that Purchase Price.
In the event that, after the Distribution Date, the Company is
acquired in a merger or other business combination transaction or 50% or more of
its consolidated assets or earning power are sold, proper provision will be made
so that each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times that Purchase Price.
If the Company does not have sufficient shares of Preferred Stock to
satisfy such obligation to issue Preferred Stock, or if the Board of Directors
so elects, the Company shall deliver upon payment of the Purchase Price of a
Right an amount of cash, Common Shares or other securities equivalent in value
to the shares of Preferred Stock issuable upon exercise of a Right; provided
that, if the Company fails to meet such obligation within 30 days following the
later of (x) the first occurrence of an event triggering the right to purchase
Common Shares and (y) the date on which the Company's right to redeem the Rights
expires, the Company must deliver, upon exercise of a Right but without
requiring payment of the Purchase Price then in effect, shares of Preferred
Stock (to the extent available) and cash equal in value to the difference
between the value of the shares of Preferred Stock otherwise issuable upon the
exercise of a Right and the Purchase Price then in effect. The Board of
Directors may extend the 30-day period described above for up to an additional
60 days to permit the taking of action that may be necessary to authorize
sufficient additional shares of Preferred Stock to permit the issuance of
Preferred Stock upon the exercise in full of the Rights.
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the Voting Power
of the outstanding Common Shares and prior to the acquisition by such person or
group of 50% or more of the Voting Power of the outstanding Common Shares, the
Board of Directors may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one one-thousandth of a share of Preferred Stock or one Common Share
per Right (subject to adjustment).
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 shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock) and in lieu thereof, an adjustment in cash will be
made, based on the market price of the Preferred Stock on the last trading day
prior to the date of exercise.
2
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
Voting Power of the outstanding Common Shares, the Board of Directors may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any 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.
The Preferred Stock purchasable upon the exercise of the Rights will
be nonredeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will be entitled to a preferred dividend equal to the greater of
(a) $1.00 or (b) 1,000 times any dividend declared on the Common Shares. In the
event of liquidation, the holders of Preferred Stock will receive a preferred
liquidation payment equal to $1,000 per share of Preferred Stock, plus an amount
equal to accrued and unpaid dividends and distributions thereon. Each share of
Preferred Stock will have 10,000 votes, voting together with the Common Shares.
Notwithstanding the immediately preceding sentence, in the event that dividends
on the Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, holders of the Preferred Stock shall have the right, voting
as a class, to elect two of the Company's Directors. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times the amount and
type of consideration received per Common Share. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution provisions. Fractional
shares of Preferred Stock in integral multiples of one one-thousandth of a share
of Preferred Stock will be issuable. In lieu of fractional shares other than
fractions that are multiples of one one-thousandth of a share, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights, except that from and after
such time as any person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
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.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form S-4. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
3
