RIGHTS AGREEMENT
dated as of
June 18, 2001
between
MODEM MEDIA, INC.
and
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent
TABLE OF CONTENTS
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PAGE
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SECTION 1. Definitions........................................................1
SECTION 2. Issuance of Rights and Right Certificates..........................6
SECTION 3. Form of Right Certificates.........................................8
SECTION 4. Registration; Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates......8
SECTION 5. Exercise of Rights.................................................9
SECTION 6. Cancellation and Destruction of Right Certificates................12
SECTION 7. Reservation and Availability of Capital Stock.....................12
SECTION 8. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights............................................13
SECTION 9. Certificate of Adjusted Purchase Price or Number of Shares........21
SECTION 10. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...............................................22
SECTION 11. Fractional Rights and Fractional Shares..........................24
SECTION 12. Rights of Action.................................................25
SECTION 13. Agreement of Right Holders.......................................26
SECTION 14. Right Certificate Holder Not Deemed a Stockholder................27
SECTION 15. Appointment of Rights Agent......................................27
SECTION 16. Merger or Consolidation or Change of Name of Rights
Agent.......................................................27
SECTION 17. Duties of Rights Agent...........................................28
SECTION 18. Change of Rights Agent...........................................31
SECTION 19. Redemption.......................................................32
SECTION 20. Exchange.........................................................32
SECTION 21. Notice of Proposed Actions.......................................33
SECTION 22. Notices..........................................................34
SECTION 23. Supplements and Amendments.......................................35
SECTION 24. Successors.......................................................35
SECTION 25. Determinations and Actions by the Board of Directors.............35
SECTION 26. Benefits of this Agreement.......................................35
SECTION 27. Severability.....................................................36
SECTION 28. Governing Law....................................................36
SECTION 29. Counterparts.....................................................36
SECTION 30. Descriptive Headings.............................................36
Exhibit A - Form of Certificate of Designation of Preferred Stock
Exhibit B - Summary Description of the Stockholder Rights Plan
Exhibit C - Form of Right Certificate
RIGHTS AGREEMENT
AGREEMENT dated as of June 18, 2001, between Modem Media, Inc., a
Delaware corporation (the "Company"), and EquiServe Trust Company, N.A., a
federally chartered trust company, as Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on June 17, 2001, the Board of Directors of the Company
authorized and declared a dividend of one preferred stock purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) outstanding at
the close of business (as hereinafter defined) on June 28, 2001 (the "Record
Date") and has authorized the issuance, upon the terms and subject to the
conditions herein, of one Right (subject to adjustment) in respect of each share
of Common Stock issued after the Record Date, each Right representing the right
to purchase, upon the terms and subject to the conditions herein, one
one-hundredth (subject to adjustment) of a share of Preferred Stock (as
hereinafter defined);
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquiring Person" means any Person who, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of the Specified
Percentage of the shares of Common Stock then outstanding. Notwithstanding
anything else contained herein, an Acquiring Person shall not include (i) an
Exempt Person; (ii) any Person that the Board of Directors of the Company
determines in good faith became the Beneficial Owner of the Specified Percentage
of shares of Common Stock inadvertently (including, without limitation, because
(A) such Person was unaware that it Beneficially Owned the Specified Percentage
of shares of Common Stock or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company, unless and until
such Person shall have failed to divest itself, as soon as practicable (as
determined, in good faith, by the Board), of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would own less
than the Specified Percentage of shares of Common Stock outstanding; (iii) True
North Communications Inc. ("True North") and its Affiliates and Associates, so
long as True North and its Affiliates and Associates do not Beneficially Own or
become
the Beneficial Owner of shares of Common Stock in addition to (A) shares of
Common Stock reported as Beneficially Owned by True North in its Schedule 13G
filed with the Securities and Exchange Commission dated February 12, 2001 and
(B) shares of Common Stock reported as Beneficially Owned by directors of the
Company in their Statements of Changes of Beneficial Ownership of Securities on
Form 4s filed with the Securities and Exchange Commission each dated June 5,
2001 (other than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock or pursuant to a split or subdivision of
the outstanding Common Stock), unless at the time, True North, together with its
Affiliates and Associates, is not the Beneficial Owner of the Specified
Percentage of the shares of Common Stock then outstanding; and (iv) any Person
that, as the result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares of Common Stock Beneficially Owned by such Person to the
Specified Percentage of the shares of Common Stock then outstanding, provided,
however, that if a Person shall become the Beneficial Owner of the Specified
Percentage of the shares of Common Stock then outstanding by reason of such
share acquisition by the Company and shall thereafter become the Beneficial
Owner of any additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Stock or pursuant to a split or subdivision of the outstanding Common Stock),
then such Person shall be deemed to be an "Acquiring Person" unless upon
becoming the Beneficial Owner of such additional shares of Common Stock such
Person does not Beneficially Own the Specified Percentage of the shares of
Common Stock then outstanding.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act as in effect on the date hereof.
"Associate" has the meaning ascribed to such term in Rule 12b-2 of the
Exchange Act as in effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to have "Beneficial Ownership" of and to "Beneficially Own", any securities:
(i) which such Person or any of its Affiliates or Associates,
directly or indirectly, beneficially owns (as determined pursuant to
Rule 13d-3 under the Exchange Act as in effect on the date hereof);
(ii) which such Person or any of its Affiliates or Associates,
directly or indirectly, has 2
(A) the right to acquire (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) 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 such securities); provided, however,
that a Person shall not be deemed the "Beneficial Owner" or to
"Beneficially Own", (1) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (2) securities
which such Person has a right to acquire upon the exercise of
Rights at any time prior to the time that any Person becomes an
Acquiring Person or (3) securities issuable upon the exercise of
Rights from and after the time that any Person becomes an
Acquiring Person if such Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 2(b) or Section 3(b)
hereof ("Original Rights") or pursuant to Section 8(i) or Section
8(p) with respect to an adjustment to Original Rights; or
(B) the right to vote (whether such right is exercisable
immediately or only upon the occurrence of certain events or the
passage of time or both) pursuant to any agreement, arrangement
or understanding or otherwise; provided that a Person shall not
be deemed the "Beneficial Owner" of or to "Beneficially Own" any
security under this clause (B) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from a
revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act and
(2) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) and with
respect to which the Person or any of its 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 such securities) for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as
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described in subparagraph (ii)(B) immediately above) or disposing of
any such securities;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such position, to be the
"Beneficial Owner" of, to have "Beneficial Ownership" of or to "Beneficially
Own" any securities that are "Beneficially Owned", including, without
limitation, in a fiduciary capacity, by an Exempt Person or by any other such
officer, director or employee of an Exempt Person.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
The "close of business" on any given date means 5:00 p.m., New York
City time, on such date; provided that if such date is not a Business Day "close
of business" means 5:00 p.m., New York City time, on the next succeeding
Business Day.
"Common Stock" means the Common Stock, par value $0.001 per share, of
the Company, except that, when used with reference to any Person other than the
Company, "Common Stock" means the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
"Distribution Date" means the earlier of (i) the close of business on
the tenth day after the Stock Acquisition Date and (ii) the close of business on
the tenth Business Day (or such later day as may be designated prior to the
occurrence of a Section 8(a)(ii) Event by action of the Board) after the date of
the commencement of a tender or exchange offer by any Person if, upon
consummation thereof, such Person would be an Acquiring Person; provided,
however, that if either of such dates occurs after the date of this Agreement
and on or prior to the Record Date, then the Distribution Date shall be the
Record Date.
"Exempt Person" means the Company or any Subsidiary of the Company
(including, without limitation, in any fiduciary capacity), or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Stock for or pursuant to the terms of any such plan or
for the purpose of funding any such plan or other benefits for employees of the
Company or any Subsidiary of the Company.
4
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the earlier of (i) the Final Expiration Date
and (ii) the time at which all Rights are redeemed as provided in Section 19 or
exchanged as provided in Section 20.
"Final Expiration Date" means the close of business on June 18, 2011.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative Preferred
Stock, par value $0.001 per share, of the Company, having the terms set forth in
the form of certificate of designation attached hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as provided
herein) at which a holder of a Right may purchase one one-hundredth of a share
of Preferred Stock (subject to adjustment as provided herein) upon exercise of a
Right, which price shall initially be $30.
"Securities Act" means the Securities Act of 1933, as amended.
"Specified Percentage" means 15% or more.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.
"Subsidiary" of any Person means any other Person of which securities
or other ownership interests having ordinary voting power, in the absence of
contingencies, to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such first Person.
"Trading Day" means a day on which the principal national securities
exchange or over-the-counter market on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange or over-the-counter market, a Business Day.
"Triggering Event" means any Section 8(a)(ii) Event or any Section 10
Event.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Adjustment Shares 8
Company Preamble
Exchange Ratio 20
Principal Party 10
Record Date Recitals
Redemption Price 19
Right Recitals
Rights Agent Preamble
Right Certificate 3
Section 8(a)(ii) Event 8
Section 10 Event 10
Substitution Period 8
SECTION 2. Issuance of Rights and Right Certificates.
(a) As soon as practicable after the Record Date, the Company will
send a summary of the Rights substantially in the form of Exhibit B hereto, by
first-class mail, postage prepaid, to each record holder of the Common Stock as
of the close of business on the Record Date at the address of such holder shown
on the registry books of the Company. Certificates for the Common Stock issued
after the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date shall have printed or written on or otherwise affixed to them
the following legend:
This certificate also evidences certain Rights as set forth in a Rights
Agreement between Modem Media, Inc. (the "Company") and EquiServe Trust
Company, N.A. dated as of June 18, 2001 and as amended from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. The Company will mail to
the holder of this certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights may be evidenced by separate certificates and no longer be
evidenced by this certificate, may be redeemed or exchanged or may
expire. As set forth in the Rights Agreement, Rights issued or
transferred to, or held by, any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement),
6
whether currently held by or on behalf of such Person or by any
subsequent holder, may be null and void.
(b) Prior to the Distribution Date, (i) the Rights will be evidenced
by the certificates for the Common Stock and not by separate Right Certificates
(as hereinafter defined) and the registered holders of the Common Stock shall be
deemed to be the registered holders of the associated Rights, and (ii) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock.
(c) From and after the Distribution Date, the Rights will be evidenced
solely by separate Right Certificates and will be transferable only in
connection with the transfer of the Right Certificates pursuant to Section 4. As
soon as practicable after the Company has notified the Rights Agent of the
occurrence of the Distribution Date, the Rights Agent will send, by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date (other than any Acquiring Person
or any Affiliate or Associate thereof), at the address of such holder shown on
the records of the Company, one or more Right Certificates evidencing one Right
(subject to adjustment as provided herein) for each share of Common Stock so
held. If an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 8, the Company shall, at the time of distribution
of the Right Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 11(a)) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights.
(d) Rights shall be issued in respect of all shares of Common Stock
outstanding as of the Record Date or issued (on original issuance or out of
treasury) after the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (i) shall, with respect to shares of Common Stock
so issued or sold (A) pursuant to the exercise of stock options or under any
employee plan or arrangement or (B) upon the exercise, conversion or exchange of
other securities issued by the Company prior to the Distribution Date, and (ii)
may, in any other case, if deemed appropriate by the Board, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided that no such Right Certificate shall be issued
if, and to the extent that, (i) the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate would
be issued or (ii) appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
7
SECTION 3. Form of Right Certificates. (a) The certificates evidencing
the Rights (and the forms of assignment, election to purchase and certificates
to be printed on the reverse thereof) (the "Right Certificates") shall be
substantially in the form of Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation 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, whenever distributed, shall be dated as of the
Record Date.
(b) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may, nevertheless, be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Right Certificates had not ceased to be such officer of the Company.
Any Right Certificate may be signed on behalf of the Company by any Person who,
at the actual date of 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.
(c) Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of stock issuable upon exercise of the Rights
made in accordance with the provisions of this Agreement.
SECTION 4. Registration; Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Following the
Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the place for surrender of Right
Certificates upon exercise, transfer or exchange, books for registration and
transfer of the Right Certificates. Such books shall show with respect to each
Right Certificate the
8
name and address of the registered holder thereof, the number of Rights
indicated on the certificate and the certificate number.
(b) At any time after the Distribution Date and prior to the
Expiration Date, any Right Certificate or Certificates may, upon the terms and
subject to the conditions set forth in this Agreement, be transferred or
exchanged for another Right Certificate or Certificates evidencing a like number
of Rights as the Right Certificate or Certificates surrendered. Any registered
holder desiring to transfer or exchange any Right Certificate or Certificates
shall surrender such Right Certificate or Certificates (with, in the case of a
transfer, the form of assignment and certificate on the reverse side thereof
duly executed) to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate or Certificates until the
registered holder of the Rights has complied with the requirements of Section
5(f). Upon satisfaction of the foregoing requirements, the Rights Agent shall,
subject to Sections 7(e), 11 and 20, countersign and deliver to the Person
entitled thereto a Right Certificate or Certificates as so requested. The
Company may require payment of a sum sufficient to cover any transfer tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of any Right Certificate or Certificates.
(c) 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 issue and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 5. Exercise of Rights. (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including Sections 5(e) and 5(f), 7(c), and 8(a)) in whole or
in part at any time after the Distribution Date and prior to the Expiration Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment (in lawful money of the United States of America
by certified check or bank draft payable in immediately available or next day
funds to the order of the Company) of the aggregate Purchase Price with respect
to the
9
Rights then to be exercised and an amount equal to any applicable transfer tax
or other governmental charge.
(b) Upon satisfaction of the requirements of Section 5(a) and subject
to Section 17(k), the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests) or (B) if the Company shall have elected to deposit the shares of
Preferred Stock issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent depositary receipts representing interests
in such number of one one-hundredths of a share of Preferred Stock to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent and the Company will direct the depositary agent to comply with
such request), (ii) requisition from the Company the amount of cash, if any, to
be paid in lieu of issuance of fractional shares in accordance with Section 11
and (iii) after receipt of such certificates or depositary receipts and cash, if
any, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate (with such certificates or receipts registered
in such name or names as may be designated by such holder). If the Company is
obligated to deliver Common Stock, other securities or assets pursuant to this
Agreement, the Company will make all arrangements necessary so that such
securities and assets are available for delivery by the Rights Agent, if and
when appropriate.
(c) Each Person (other than the Company) in whose name any certificate
for Preferred Stock is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such 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 transfer taxes or other governmental charges) was
made; provided that if the date of such surrender and payment is a date upon
which the transfer books of the Company relating to the Preferred Stock are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the applicable transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including 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.
10
(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 number of Rights remaining unexercised shall be issued by the
Rights Agent and 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, subject to the provisions of Section 11.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 8(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person (or
any such Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or in any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or any such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 5(e)
shall become null and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 5(e) are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates and Associates or any
transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to any purported transfer pursuant to Section 4 or exercise
pursuant to this Section 5 unless the registered holder of the applicable Rights
(i) shall have completed and signed the certificate contained in the form of
assignment or election to purchase, as the case may be, set forth on the reverse
side of the Right Certificate surrendered for such transfer or exercise, as the
case may be, (ii) shall not have indicated an affirmative response to clause 1
or 2 thereof and (iii) shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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SECTION 6. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent in canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by this Agreement. The Company shall deliver to the
Rights Agent for cancellation, and the Rights Agent shall cancel, any other
Right Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 7. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available a number of authorized but not outstanding shares of Preferred Stock
sufficient to permit the exercise in full of all outstanding Rights as provided
in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise of
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 securities reserved for such issuance to be listed on any such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Section
8(a)(ii) Event and determination of the consideration to be delivered by the
Company upon exercise of the Rights in accordance with Section 8(a)(iii), or as
soon as is required by law following the Distribution Date, as the case may be,
a registration statement under the Securities Act with respect to the securities
issuable upon exercise of the Rights, (ii) to cause such registration statement
to become effective as soon as practicable after such filing and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or blue sky laws
of the various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause 7(c)(i), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding anything contained in this
12
Agreement to the contrary, the Rights shall not be exercisable for securities in
any jurisdiction if the requisite qualification in such jurisdiction has not
been obtained, such exercise is not permitted under applicable law or a
registration statement in respect of such securities has not been declared
effective.
(d) The Company shall take all such action as may be necessary to
insure that all one one-hundredths of a share of Preferred Stock issuable upon
exercise of Rights shall, at the time of delivery of the certificates for such
securities (subject to payment of the Purchase Price), be duly authorized,
validly issued, fully paid and nonassessable.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and other governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates and of any
certificates for Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax or other governmental charge
which may be payable in respect of any transfer involved in the issuance or
delivery of any Right Certificates or any certificates for Preferred Stock to a
Person other than the registered holder of the applicable Right Certificate.
Prior to any such issuance or delivery of any Right Certificates or any
certificates for Preferred Stock, any such transfer tax or other governmental
charge shall have been paid by the holder of such Right Certificate or it shall
have been established to the Company's satisfaction that no such tax or other
governmental charge is due.
SECTION 8. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.
(a) (i) If the Company shall at any time after the date of this
Agreement (A) pay a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock into
a greater number of shares, (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
involving the Company), the Purchase Price in effect immediately prior
to the record date for such dividend or the effective date of such
subdivision, combination or reclassification, and the number and kind
of shares of Preferred Stock or other capital stock issuable on such
date, shall be proportionately adjusted so that each holder of a Right
shall (except as otherwise provided herein, including Section 5(e))
thereafter be entitled to receive, upon exercise of such Right at the
Purchase Price in effect immediately prior to such date, the aggregate
number and kind of shares of Preferred Stock or other capital stock,
as the case may be, which, if such
13
Right had been exercised immediately prior to such date and at a time
when the applicable transfer books of the Company were open, such
holder would have been entitled to receive upon such exercise and by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which requires an adjustment under both this
Section 8(a)(i) and Section 8(a)(ii), the adjustment provided for in
this Section 8(a)(i) shall be made prior to and in addition to any
adjustment required pursuant to Section 8(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement,
become an Acquiring Person (a "Section 8(a)(ii) Event"), then each
holder of a Right shall (except as otherwise provided herein,
including Section 5(e)) thereafter be entitled to receive, upon
exercise thereof at the Purchase Price in effect immediately prior to
the first occurrence of a Section 8(a)(ii) Event, in lieu of Preferred
Stock, such number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock of the Company (such shares being
referred to herein as the "Adjustment Shares") equal to the result
obtained by dividing
(x) the product obtained by multiplying the Purchase Price
in effect immediately prior to the first occurrence of a Section
8(a)(ii) Event by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately
prior to such first occurrence (such product being thereafter
referred to as the "Purchase Price" for each Right) by
(y) 50% of the current market price per share of Common
Stock (determined pursuant to Section 8(d)(i)) on the date of
such first occurrence;
provided, however, that the Purchase Price (as so adjusted pursuant to
the foregoing clause (ii)(x)) and the number of Adjustment Shares so
receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 8(f). From and
after the occurrence of a Section 10 Event, any Rights that have not
been exercised pursuant to this Section 8(a)(ii) shall thereafter be
exercisable only in accordance with Section 10 and not pursuant to
this Section 8(a)(ii).
(iii) If the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the Rights
in accordance
14
with Section 8(a)(ii), the Company shall, with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon
payment of the Purchase Price then in effect, (A) (to the extent
available) Common Stock and then, (B) (to the extent available) such
number of one one-hundredths of a share of Preferred Stock as are then
equivalent in value to the value of the Adjustment Shares, and then,
if necessary, (C) other equity or debt securities of the Company, cash
or other assets, a reduction in the Purchase Price or any combination
of the foregoing, having an aggregate value (based upon the advice of
a nationally recognized investment banking firm) equal to the value of
the Adjustment Shares; provided that (x) the Company may, and (y) if
the Company shall not have made adequate provision as required above
to deliver value within 30 days following the first occurrence of a
Section 8(a)(ii) Event (the "Substitution Period"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, (1) (to the
extent available) Common Stock and then (2) (to the extent available)
one-hundredths of a share of Preferred Stock and then, if necessary,
(3) other equity or debt securities of the Company, cash or other
assets or any combination of the foregoing, having an aggregate value
(based upon the advice of a nationally recognized investment banking
firm) equal to the excess of the value of the Adjustment Shares over
the Purchase Price. To the extent that the Company determines that
some action is to be taken pursuant to the preceding sentence, the
Company (X) shall provide, subject to Section 5(e), 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 decide the appropriate form and value
of any consideration to be delivered as referred to in such sentence.
If any such suspension occurs, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. For purposes of this Section
8(a)(iii), the value of the Common Stock shall be the current market
price per share of Common Stock (as determined pursuant to Section
8(d)(i)) on the date of the first occurrence of a Section 8(a)(ii)
Event; any common stock equivalent shall be deemed to have the same
value as the Common Stock on such date; and the value of other
securities or assets shall be determined pursuant to Section
8(d)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and
15
preferences as the shares of Preferred Stock ("equivalent preferred stock")) or
securities convertible into or exercisable for Preferred Stock (or equivalent
preferred stock) at a price per share of Preferred Stock (or equivalent
preferred stock) (in each case, taking account of any conversion or exercise
price) less than the current market price per share of Preferred Stock (as
determined pursuant to Section 8(d)) on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such 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 price (taking account of any conversion or exercise price) of the
total number of shares of Preferred Stock (and/or equivalent preferred stock) 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) so to be offered. In case such subscription price
may be paid by delivery of 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, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. 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 if such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger involving the Company) of
evidences of indebtedness, equity securities other than Preferred Stock, assets
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company) or rights, options or warrants (excluding those
referred to in Section 8(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price per share of Preferred Stock (as determined
pursuant to Section 8(d)(iii)) on such record date, less the value (as
determined pursuant to Section 8(d)(iii)) of such evidences of indebtedness,
equity securities, assets, rights, options or warrants so to be distributed with
respect to one share of Preferred Stock and the denominator of which shall be
such current market price per share of Preferred Stock. Such adjustment shall be
made successively whenever such a record date is fixed, and if such distribution
is not so made, the Purchase Price shall be
16
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 other than
computations made pursuant to Section 8(a)(iii) or 11, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock at the close of the
regular session of trading for the 30 consecutive Trading Days immediately prior
to such date; for purposes of computations made pursuant to Section 8(a)(iii),
the "current market price" per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common Stock at
the close of the regular session of trading for the 10 consecutive Trading Days
immediately following such date; and for purposes of computations made pursuant
to Section 11, the "current market price" per share of Common Stock for any
Trading Day shall be deemed to be the closing price per share of Common Stock at
the close of the regular session of trading for such Trading Day; provided that
if the current market price per share of the Common Stock is determined during a
period following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such Common
Stock or securities exercisable for or convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above, 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" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, at the close of the regular session of trading 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 at the close of the regular session of trading with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board. If on any such date, no
market maker is making a market in the
17
Common Stock, the "current market value" of such shares on such date shall be as
determined in good faith by the Board (or, if at the time of such determination
there is an Acquiring Person, by a nationally recognized investment banking
firm) which determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the
same manner as set forth above for the Common Stock in Section 8(d)(i)
(other than the last sentence thereof). If the current market price
per share of Preferred Stock cannot be determined in such manner, the
"current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number may
be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current
market price per share of Common Stock (as determined pursuant to
Section 8(d)(i)). For all purposes of this Agreement, the "current
market price" of one one-hundredth of a share of Preferred Stock shall
be equal to the "current market price" of one share of Preferred Stock
divided by 100.
(iii) For the purpose of any computation hereunder, the value of
any securities or assets other than Common Stock or Preferred Stock
shall be the fair value as determined in good faith by the Board or,
if at the time of such determination there is an Acquiring Person, by
a nationally recognized investment banking firm, which determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided that any
adjustments which by reason of this Section 8(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 8 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be.
(f) If at any time, as a result of an adjustment made pursuant to
Section 8(a)(ii) or Section 10(a), the holder of any Right shall be entitled to
receive upon exercise of such Right any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to
18
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 8, and the
provisions of Sections 5, 7, 10 and 11 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 hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock issuable 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 8(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 8(b) and 8(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-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share for which a
Right was exercisable immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock issuable 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-hundredths of a
share of Preferred Stock for which such 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
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 8(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 11, the
19
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of 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-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a share and
the number of shares which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-hundredths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 8 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-hundredths of a share of Preferred Stock or other capital
stock, if any, issuable upon such exercise over and above the number of one
one-hundredths of a share of Preferred Stock or other capital stock, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided 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 8 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 8, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash
20
of any Preferred Stock at less than the current market price, issuance wholly
for cash of any securities which by their terms are convertible into or
exercisable for Preferred Stock, stock dividends or issuance of rights, options
or warrants referred to in this Section 8 hereafter made by the Company to the
holders of its Preferred Stock, shall not be taxable to such stockholders.
(n) The Company will not at any time after the Distribution Date (i)
consolidate, merge or otherwise combine with, or (ii) sell or otherwise transfer
(and/or permit any of its Subsidiaries to sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries, taken as a whole, to, any other Person or Persons if (x) at the
time of or immediately after such consolidation, merger, combination or sale
there are any rights, warrants or other instruments or securities outstanding or
any agreements or arrangements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger,
combination or sale, the stockholders of a Person who constitutes, or would
constitute, the "Principal Party" for the purposes of Section 10 shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company agrees that after the Distribution Date, it will not,
except as permitted by Sections 19, 20 and 23, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, if at
any time after the date hereof and prior to the Distribution Date the Company
shall (i) pay a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock into a
larger number of shares or (iii) combine the outstanding Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter as contemplated
by Section 2, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such event by a fraction
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
21
SECTION 9. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 8 and 10, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in the manner
set forth in Section 22. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained.
SECTION 10. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) If, following the occurrence of a Section 8(a)(ii) Event,
directly or indirectly,
(x) the Company shall consolidate with, merge into or otherwise
combine with, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or
combination,
(y) any Person shall merge into, or otherwise combine with, the
Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and, in connection with such
merger or combination, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for other stock or securities
of the Company or any other Person, cash or any other property, or
(z) the Company and/or one or more of its Subsidiaries shall sell
or otherwise transfer, in one transaction or a series of related
transactions, to any other Person or Persons, assets or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries, taken as a whole,
(each of the above, a "Section 10 Event") then, and in each such case, proper
provision shall promptly be made so that
(i) each holder of a Right shall thereafter be entitled to
receive, upon exercise thereof at the Purchase Price in effect
immediately prior to the first occurrence of a Section 8(a)(ii) Event,
such number of duly authorized, validly issued, fully paid and
nonassessable shares of freely tradeable Common Stock of the Principal
Party (as hereinafter defined), not subject to any rights of call or
first refusal, liens, encumbrances or other claims, as shall be equal
to the result obtained by dividing
22
(A) the product obtained by multiplying the Purchase
Price in effect immediately prior to the first occurrence of a
Section 8(a)(ii) Event by the number of one one-hundredths of
a share of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence (such product being
thereafter referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by
(B) 50% of the current market price (determined pursuant
to Section 8(d)(i)) per share of the Common Stock of such
Principal Party on the date of consummation of such
consolidation, merger, combination, sale or transfer;
provided, however, that the Purchase Price (as so adjusted pursuant to
the foregoing clause (i)(A)) and the number of shares of Common Stock
of such Principal Party so receivable upon exercise of a Right shall
be subject to further adjustment as appropriate in accordance with
Section 8(f) to reflect any events occurring in respect of the Common
Stock of such Principal Party after the occurrence of such
consolidation, merger, sale or transfer;
(ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination,
sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 8 shall apply only to such Principal Party
following the first occurrence of a Section 10 Event; and
(iv) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its
Common Stock to permit exercise of all outstanding Rights in
accordance with this Section 10(a)) in connection with the
consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means
23
(i) in the case of any transaction described in Section 10(a)(x)
or 10(a)(y), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such
merger, consolidation or combination, and if no securities are so
issued, the Person that survives or results from such merger,
consolidation or combination; or
(ii) in the case of any transaction described in Section
10(a)(z), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such
transaction or transactions;
provided that in any such case, (A) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (B) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
combination, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which are not outstanding or
otherwise reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 10 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 10(a) and
10(b) and providing that, as soon as practicable after the date of any
consolidation, merger, combination, sale or transfer mentioned in Section 10(a),
the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the securities issuable upon exercise
of the Rights, and will use its best efforts to cause such
registration statement (A) to become effective as soon as practicable
after such filing and (B) to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date, and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
24
SECTION 11. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 8(p), or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay 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
price of a whole Right. For purposes of this Section 11(a), the current market
price of a whole Right shall be the closing price of a Right at the close of the
regular session of trading for the Trading Day immediately prior to the date on
which such fractional Rights would otherwise have been issuable. The closing
price of a Right for any day shall be determined in the same manner as set forth
for the Common Stock in Section 8(d)(i).
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 11(b), the current market price of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 8(d)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or upon any
exchange pursuant to Section 20, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised or exchanged
as herein provided an amount in cash equal to the same fraction of the current
market price of a share of Common Stock. For purposes of this Section 11(c), the
current market price of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 8(d)) for the Trading
Day immediately prior to the date of such exercise or exchange.
(d) Each holder of a Right, by his acceptance of the Right, expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 11.
25
SECTION 12. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing Common Stock); and any such holder, without the
consent of any other such holder or the Rights Agent, may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of, any Person subject to this Agreement.
SECTION 13. Agreement of Right Holders. Each holder of a Right, by his
acceptance of the Right, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights will be evidenced by
Right Certificates and transferable only on the registry books of the
Rights Agent pursuant to Section 2;
(c) subject to Sections 4 and 5, the Company and the Rights Agent
may deem and treat the Person in whose name a Right Certificate (or,
prior to the Distribution Date, a certificate representing shares of
Common Stock) is registered as the absolute owner of such certificate
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the certificate
representing shares of Common Stock made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 5(e), shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative
26
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 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 14. 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 shares of capital stock
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 21), 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 15. Appointment of Rights Agent. (a) The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights 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 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. If the Company appoints one or more co-rights agents, the
respective duties of the Rights Agent and any co-rights agents shall be as the
Company shall determine.
(b) The Company shall pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the execution or administration of this
Agreement and the exercise and performance of its duties hereunder. The Company
also shall indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the administration of this Agreement or
the exercise or performance of its duties hereunder, including the costs and
expenses of defending against any claim of liability.
27
SECTION 16. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated or combined, or any
corporation resulting from any merger, consolidation or combination to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 18. If at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 17. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary that any fact or
matter (including, without limitation, the identity of any "Acquiring
Person" and
28
the determination of "current market price") be proved or established
by the Company prior to taking, suffering or omitting to take any
action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the President or any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or
in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be responsible (i) in respect of
the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof), (ii) for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate or (iii) for any change in the exercisability of the
Rights (including the Rights becoming void pursuant to Section 5(e))
or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided herein or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment). The Rights Agent shall
not by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Preferred Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of
Preferred Stock or other securities will, when issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and
delivered, all such acts, instruments and assurances as
29
may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not the Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person.
(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 or to any holders of Rights resulting from any such act,
default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the cases may
be, has either not been completed or indicates an affirmative response
to clause 1 or 2 thereof, the Rights Agent shall not take any further
action with respect to
30
such requested exercise or transfer without first consulting with the
Company.
(l) 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 the administration of this Agreement or the
exercise or performance of its duties hereunder in reliance upon any
Right Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, instruction,
direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 18. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized, in good standing and doing business under the laws of
the United States or of any state of the United States, having a principal
office in the State of New York, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a corporation described in clause 18(a).
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
31
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and the Preferred Stock, and, subsequent to the Distribution Date, mail a notice
thereof in writing to the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 18, 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 19. Redemption. (a) At any time prior to the occurrence of a
Section 8(a)(ii) Event, the Board may, at its option, redeem all but not less
than all of the then outstanding Rights at a redemption price of $0.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board in its sole discretion may establish. The
Redemption Price shall be payable, at the option of the Company, in cash, shares
of Common Stock, or such other form of consideration as the Board shall
determine.
(b) Immediately upon the action of the Board electing to redeem the
Rights (or at such later time as the Board may establish for the effectiveness
of such redemption) and without any further action and without any notice, the
right to exercise the Rights will terminate and thereafter the only right of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. The Company shall promptly thereafter give notice of such redemption to
the Rights Agent and the holders of the Rights in the manner set forth in
Section 22; provided that the failure to give, or any defect in, such notice
shall not affect the validity of such redemption. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
SECTION 20. Exchange. (a) At any time after the occurrence of a
Section 8(a)(ii) Event, the Board may, at its option, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to Section 5(e)) for shares of Common Stock at an
exchange ratio of one share of Common Stock 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"). The exchange of the Rights by the Board may be made effective
at such
32
time, on such basis and with such conditions as the Board in its sole discretion
may establish. Notwithstanding the foregoing, (i) the Board shall not be
empowered to effect such exchange at any time after an Acquiring Person,
together with all Affiliates and Associates of such Acquiring Person, becomes
the Beneficial Owner of 50% or more of the shares of Common Stock then
outstanding and (ii) from and after the occurrence of a Section 10 Event, any
Rights that have not been exchanged pursuant to this Section 20(a) shall
thereafter be exercisable only in accordance with Section 10 and may not be
exchanged pursuant to this Section 20(a).
(b) Immediately upon the effectiveness of the action of the Board
electing to exchange any Rights pursuant to Section 20(a) and without any
further action and without any notice, the right to exercise such Rights will
terminate and thereafter the only right of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
thereafter give notice of such exchange to the Rights Agent and the holders of
the Rights to be exchanged in the manner set forth in Section 22; provided that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. 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 Rights for shares of
Common Stock 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 Section 5(e)) held by each holder of Rights.
(c) The Company may at its option substitute, and in the event that
there shall not be sufficient shares of Common Stock authorized but not
outstanding to permit the exchange of Rights for Common Stock in accordance with
Section 20(a), the Company shall substitute to the extent of such insufficiency,
for each share of Common Stock that would otherwise be issuable upon exchange of
a Right, a number of one one-hundredth of a share of Preferred Stock such that
the current market price (determined pursuant to Section 8(d)) of such number of
one one-hundredth of a share of Preferred Stock is equal to the current market
price (determined pursuant to Section 8(d)) of one share of Common Stock as of
the date of such exchange.
SECTION 21. Notice of Proposed Actions. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class or to make any other distribution (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company) to the holders of Preferred Stock, (ii) to offer to the holders of its
Preferred Stock rights or
33
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 or combination of outstanding
shares of Preferred Stock), (iv) to effect any consolidation, merger or
combination with any other Person, or to effect or permit any of its
Subsidiaries to effect any sale or other transfer, in one transaction or a
series of related transactions, of assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries, taken as
a whole, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right, to the extent feasible and in accordance with Section 22, a notice of
such proposed action, which shall specify the record date for the purposes of
any such dividend, distribution or offering of rights or warrants, or the date
on which any such reclassification, consolidation, merger, combination, sale,
transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by Section 21(a)(i) or 21(a)(ii) above at least 20 days prior to the record date
for determining holders of the Preferred Stock entitled to participate in such
dividend, distribution or offering, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a public filing by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right,
in accordance with Section 22, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 8(a)(ii) or 10, as the case may be, and (ii) all references in
Section 21(a) to Preferred Stock shall be deemed thereafter to refer to Common
Stock or other capital stock, as the case may be.
SECTION 22. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right to or on
the Company shall be sufficiently given or made if sent by first-class mail
(postage
34
prepaid) to the address of the Company indicated on the signature page hereof or
such other address as the Company shall specify in writing to the Rights Agent.
Subject to the provisions of Section 18, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right to or
on the Rights Agent shall be sufficiently given or made if sent by first-class
mail (postage prepaid) to the address of the Rights Agent indicated on the
signature page hereof or such other address as the Rights Agent shall specify in
writing to the Company. Except as otherwise expressly set forth in this
Agreement, notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate or any
certificate representing shares of Common Stock shall be sufficiently given or
made if sent by first-class mail (postage prepaid) to the address of such holder
shown on the registry books of the Company.
SECTION 23. Supplements and Amendments. At any time prior to the
occurrence of Section 8(a)(ii) Event, the Company may, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of certificates
representing shares of Common Stock. At any time after the occurrence of a
Section 8(a)(ii) Event, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights, provided, however, that no such supplement or amendment
may (a) adversely affect the interests of the holders of Rights as such (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
(b) cause this Agreement again to become amendable other than in accordance with
this sentence, or (c) cause the Rights again to become redeemable. Upon the
delivery of a certificate from the Chairman of the Board, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Agreement, the Rights Agent
shall execute such supplement or amendment.
SECTION 24. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 25. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on
the date of this Agreement. The Board shall have the exclusive power and
35
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including the right and power
to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or exchange or not to redeem or
exchange the Rights or to amend the Agreement).
SECTION 26. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock).
SECTION 27. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
SECTION 28. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
SECTION 29. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same instrument.
SECTION 30. Descriptive Headings. The captions herein are included for
convenience of reference only, do not constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MODEM MEDIA, INC.
By: /s/ Xxxxxx Xxxx
---------------------------------
Name: Xxxxxx Xxxx
Title: Senior Vice President, General
Counsel, Human Resources and
Corporate Secretary
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
EQUISERVE TRUST COMPANY, N.A.
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: Senior Account Manager
Xxx Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
37
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MODEM MEDIA, INC.
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
I, Xxxxxx Xxxx, Senior Vice President, General Counsel, Human
Resources and Corporate Secretary, of Modem Media, Inc., a corporation organized
and existing under the General Corporation Law of the State of Delaware
("Delaware Law"), in accordance with the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on June 17, 2001, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
SECTION 1. Designation and Number of Shares. The shares of such series
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 1,000,000. Such number of shares of the Series A Preferred Stock may be
increased or decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
issuable upon exercise or conversion of outstanding rights, options or other
securities issued by the Corporation.
SECTION 2. Dividends and Distributions.
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(a) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable on March 31, June 30, September 30 and December 31
of each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of any share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (i) $1.00 and (ii) subject
to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends or other
distributions and 100 times the aggregate per share amount of all
non-cash dividends or other distributions (other than (A) a dividend
payable in shares of Common Stock, par value $0.001 per share, of the
Corporation (the "Common Stock") or (B) a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise)), declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. If the
Corporation shall at any time after June 18, 2001 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares
of Common Stock or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under
clause 2(a)(ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph 2(a) above
immediately after it declares a dividend or distribution on the Common
Stock (other than as described in clauses 2(a)(ii)(A) and 2(a)(ii)(B)
above); provided that if no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date (or, with respect to the first Quarterly Dividend Payment
Date, the period between the first issuance of any share or fraction
of a share of Series A Preferred Stock and such first Quarterly
Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred Stock shall
A-2
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock, unless the date of issue of such shares
is on or before the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to
accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and on or before such
Quarterly Dividend Payment Date, in which case dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid
on shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more
than 60 days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of
stockholders of the Corporation. If the Corporation shall at any time
after the Rights Declaration Date pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
A-3
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as a single class on all matters submitted
to a vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall xxxx
the beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A
Preferred Stock then outstanding shall have been declared and
paid or set apart for payment. During each default period, all
holders of Preferred Stock and any other series of Preferred
Stock then entitled as a class to elect directors, voting
together as a single class, irrespective of series, shall have
the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at
a special meeting called pursuant to subparagraph 3(c)(iii)
hereof or at any annual meeting of stockholders, and thereafter
at annual meetings of stockholders, provided that neither such
voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the
holders of 10% in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum
of holders of Common Stock shall not affect the exercise by
holders of Preferred Stock of such voting right. At any meeting
at which holders of Preferred Stock shall initially exercise such
voting right, they shall have the right, voting as a class, to
elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such right
is exercised at an annual meeting, to elect two Directors. If the
number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided
A-4
or pursuant to the rights of any equity securities ranking senior
to or pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall have
previously exercised their right to elect Directors during an
existing default period, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than
10% of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of special
meeting of holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled
to vote pursuant to this paragraph 3(c)(iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the
books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders
owning in the aggregate not less than 10% of the total number of
shares of Preferred Stock outstanding, irrespective of series.
Notwithstanding the provisions of this paragraph 3(c)(iii), no
such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their
right to elect two Directors voting as a class, after the
exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the
Board of Directors may (except as provided in paragraph 3(c)(ii)
hereof) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of
stock which elected the Director whose office shall have become
vacant. References in this paragraph 3(c) to Directors elected by
the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
A-5
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by
the holders of Preferred Stock as a class shall terminate, and
(z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws
irrespective of any increase made pursuant to the provisions of
paragraph 3(c)(ii) hereof (such number being subject, however, to
change thereafter in any manner provided by law or in the
certificate of incorporation or bylaws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(d) The Certificate of Incorporation of the Corporation shall not
be amended in any manner (whether by merger or otherwise) so as to
adversely affect the powers, preferences or special rights of the
Series A Preferred Stock without the affirmative vote of the holders
of a majority of the outstanding shares of Series A Preferred Stock,
voting separately as a class.
(e) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent
shall not be required for taking any corporate action.
SECTION 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding
shares of Series A Preferred Stock shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably
on the
A-6
Series A Preferred Stock and all such other parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock; provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of stock of the Corporation ranking junior
(as to dividends and upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of Series A Preferred Stock and all such other parity
stock upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of
stock of the Corporation unless the Corporation could, under paragraph
4(a), purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
SECTION 6. Liquidation, Dissolution and Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be
A-7
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 7. Consolidation, Merger, Etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the
A-8
number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
SECTION 9. Rank. The Series A Preferred Stock shall rank junior (as to
dividends and upon liquidation, dissolution and winding up) to all other series
of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
SECTION 10. Fractional Shares. Series A Preferred Stock may be issued
in fractions that are multiplies of one one-hundredth of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
A-9
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
this __ day of June, 2001.
By:
---------------------------------
Name: Xxxxxx Xxxx
Title: Senior Vice President, General
Counsel, Human Resources and
Corporate Secretary
A-10
EXHIBIT B
AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED OR TRANSFERRED TO, OR HELD
BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER
CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY
BE NULL AND VOID.
SUMMARY OF RIGHTS
MODEM MEDIA, INC.
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security The Board of Directors has declared a dividend of
one preferred stock purchase right for each
outstanding share of the Company's Common
Stock, payable to holders of record as of the close
of business on June 28, 2001 (each a "Right" and
collectively, the "Rights").
Transfer Prior to the Distribution Date1, (i) the Rights will
be evidenced by the certificates for the Common
Stock and not separate Right Certificates and the
registered holders of the Common Stock shall be
deemed to be the registered holders of the
associated Rights, and (ii) the Rights will be
transferable only in connection with the transfer of
the underlying shares of Common Stock.
--------
1 Distribution Date generally means the earlier of:
(1) the 10th day after public announcement that any person or group has become
an Acquiring Person (as defined below), and
(2) the 10th business day after the date of the commencement of a
tender or exchange offer by any person which would, if consummated,
result in such person becoming an Acquiring Person.
B-1
After the Distribution Date, the Rights Agent will mail
separate certificates evidencing the Rights to each record
holder of the Common Stock as of the close of business on
the Distribution Date, and thereafter the Rights will be
transferable separately from the Common Stock.
Exercise Prior to the Distribution Date, the Rights will not be
exercisable.
After the Distribution Date, but prior to the occurrence of
an event described below under "Flip-In" or "Flip-Over",
each Right will be exercisable to purchase, for $30 (the
"Purchase Price"), one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par value $0.001
per share, of the Company.
Acquiring Person Subject to certain exceptions, an "Acquiring Person" is any
person who becomes the beneficial owner of 15% or more of
the Company's Common Stock. Exceptions include: (i) any
person that the Company's Board of Directors determines has
exceeded the threshold inadvertently and then promptly
divests of the excess shares and (ii) True North
Communications Inc. and its affiliates and associates, as
long as it and its affiliates and associates do not acquire
any additional shares of the Company's Common Stock beyond
that reported on its Schedule 13G dated February 12, 2001
and Form 4s of the Company's directors each dated June 5,
2001.
Flip-In If any person or group becomes an Acquiring Person, then
each Right (other than Rights beneficially owned by the
Acquiring Person and certain affiliated persons) will
entitle the holder to purchase, for the Purchase Price, a
number of shares of the Company's Common Stock having a
market value of twice the Purchase Price.
Flip-Over If, after any person has become an Acquiring Person, (1)
the Company is involved in a merger or
B-2
other business combination in which the Company is not the
surviving corporation or its Common Stock is exchanged for
other securities or assets or (2) the Company and/or one or
more of its subsidiaries sell or otherwise transfer assets
or earning power aggregating more than 50% of the assets or
earning power of the Company and its subsidiaries, taken as
a whole, then each Right will entitle the holder to
purchase, for the Purchase Price, a number of shares of
common stock of the other party to such business
combination or sale (or in certain circumstances, an
affiliate) having a market value of twice the Purchase
Price.
Exchange At any time after any person has become an Acquiring Person
(but before any person becomes the beneficial owner of 50%
or more of the Company's Common Stock), the Board of
Directors may exchange all or part of the Rights (other
than the Rights beneficially owned by the Acquiring Person
and certain affiliated persons) for shares of Common Stock
at an exchange ratio of one share of Common Stock per
Right.
Redemption The Board of Directors may redeem all of the Rights at a
price of $0.001 per Right at any time prior to the time
that any person becomes an Acquiring Person.
Expiration The Rights will expire on June 18, 2011, unless earlier
exchanged or redeemed.
Amendments Prior to any person becoming an Acquiring Person, the
Rights Agreement may be amended in any respect.
After any person has become an Acquiring Person, the Rights
Agreement may not be amended in any respect that would
adversely affect the Rights holders (other than any
Acquiring Person and certain affiliated persons) or cause
the Rights again to become redeemable.
B-3
Voting Rights Rights holders have no rights as a stockholder of
the Company, including the right to vote and to receive
dividends.
Antidilution Provisions The Rights Agreement includes standard
antidilution provisions designed to protect the efficacy of
the Rights.
Taxes While the dividend of the Rights will not be taxable to
stockholders or to the Company, stockholders or the Company
may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable as
set forth above.
------------------
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. 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, as amended from time to time,
the complete terms of which are hereby incorporated by reference.
------------------
B-4
EXHIBIT C
[FORM OF RIGHT CERTIFICATE]
No. R- _______________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF JUNE 18, 2011 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, MAY BE NULL AND VOID.
RIGHT CERTIFICATE
MODEM MEDIA, INC.
This Right Certificate certifies that ______________________, or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of June 18, 2001 (the
"Rights Agreement") between Modem Media, Inc., a Delaware corporation (the
"Company"), and EquiServe Trust Company, N.A. (the "Rights Agent")) to purchase
from the Company, at any time after the Distribution Date and prior to the
Expiration Date, ___ one-hundredth[s] of a fully paid, nonassessable share of
Series A Participating Cumulative Preferred Stock (the "Preferred Stock") of the
Company at a purchase price of $30 per one one-hundredth of a share (the
"Purchase Price"), payable in lawful money of the United States of America, upon
surrender of this Right Certificate, with the form of election to purchase and
related certificate duly executed, and payment of the Purchase Price at an
office of the Rights Agent designated for such purpose.
Terms used herein and not otherwise defined herein shall have the
meanings given to them in the Rights Agreement.
C-1
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) and the Purchase
Price set forth above are as of ____________, 20__, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
Upon the occurrence of a Section 8(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of such Acquiring Person, (b) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such, such Rights shall
become null and void without any further action, and no holder hereof shall have
any rights whatsoever with respect to 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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
At any time after the Distribution Date and prior to the Expiration
Date, any Right Certificate or Certificates may, upon the terms and subject to
the conditions set forth in the Rights Agreement, be transferred or exchanged
for another Right Certificate or Certificates evidencing a like number of Rights
as the Right Certificate or Certificates surrendered. Any registered holder
desiring to transfer or exchange any Right Certificate or Certificates shall
surrender such Right Certificate or Certificates (with, in the case of a
transfer, the form of assignment and certificate on the reverse side thereof
duly executed) to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the occurrence of a Section 8(a)(ii)
Event redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.001 per Right as such amount may be
appropriately
C-2
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of the Rights Agreement; or
(b) at any time after the occurrence of a Section 8(a)(ii) Event
exchange all or part of the then outstanding Rights (which shall not
include Rights that have become void pursuant to Section 5(e)) for
shares of Common Stock at an exchange ratio of one share of Common
Stock per Right appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date of the
Rights Agreement. If the Rights shall be exchanged in part, the holder
of this Right Certificate shall be entitled to receive upon surrender
hereof another Right Certificate or Certificates for the number of
whole Rights not exchanged.
The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon the exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised an amount in cash equal to the same fraction of the current
market price of one one-hundredth of a share of Preferred Stock. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Certificates for the number
of whole Rights not exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
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.
C-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of ___________________________, 20__
MODEM MEDIA, INC.
By:
---------------------------------
Title:
Attest:
______________________________________
Secretary
Countersigned:
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent
By:
--------------------------------------
Authorized Signatory
C-4
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED
-------------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________________, 20__
_______________________________
Signature
Signature Guaranteed:
C-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are not
being assigned by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, 20 __
------------------------------------
Signature
------------------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
------------------
C-6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Right
Certificate.)
To: Modem Media, Inc.
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:
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 of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: ________________, 20__
____________________________________
Signature
Signature Guaranteed:
C-7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___are ___are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___did ___did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 20 __
------------------------------------
Signature
------------------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
------------------
C-8
