EXHIBIT 4.1(a)
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CORRECTIONAL SERVICES CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY, AS
RIGHTS AGENT
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RIGHTS AGREEMENT
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DATED AS OF JANUARY 11, 2000
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RIGHTS AGREEMENT, DATED AS OF JANUARY 11, 2000 (THE "AGREEMENT"), BETWEEN
CORRECTIONAL SERVICES CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"),
AND AMERICAN STOCK TRANSFER & TRUST COMPANY, A BANKING CORPORATION
ORGANIZED UNDER THE LAWS OF NEW YORK (THE "RIGHTS AGENT").
The Board of Directors of the Company (the "Board") authorized
and declared a dividend of one Right (as hereinafter defined) for each
Common Share (as hereinafter defined) of the Company outstanding at the
Close of Business (as hereinafter defined) on January 11, 2000 (the "Record
Date"), each Right representing the right to purchase one one-thousandth
(subject to adjustment as provided herein) of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions herein
set forth, and has further authorized the issuance of one Right with
respect to each Common Share that shall become outstanding between the
Record Date and the Distribution Date (as hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the earlier of
the Redemption Date (as hereinafter defined) and the Final Expiration Date
(as hereinafter defined) in accordance with the provisions of Section 22
hereof.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 10% or more of the then outstanding Common Shares
(other than as a result of a Permitted Offer) or was such a Beneficial
Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 10% or more of the then outstanding
Common Shares, but shall not include (A) the Company, (B) any Subsidiary of
the Company, (C) any employee benefit plan of the Company or of any
Subsidiary of the Company, or (D) any Person or entity holding Common
Shares for or pursuant to the terms of any such employee benefit plan. A
Person other than the Company or any Subsidiary of the Company holding
Common Shares for or pursuant to the terms of an employee benefit plan of
the Company or of any Subsidiary of the Company and in addition being the
Beneficial Owner of Common Shares that are not held for or pursuant to the
terms of any such plan shall be deemed to constitute an Acquiring Person,
notwithstanding anything herein stated, if, but only if, it, together with
its Affiliates and Associates, shall be the Beneficial Owner of 10% or more
(or in the case of a Grandfathered Person, its Grandfathered Percentage),
exclusive of those Common Shares held by it for or pursuant to the terms of
any such plan, of the Common Shares then outstanding. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" (x) as a result of
the acquisition of Common Shares by the Company which, by reducing the
number of Common Shares outstanding, increases the proportional number of
Common Shares beneficially owned by such Person together with all
Affiliates and Associates of such Person provided that if (1) a Person
would become an Acquiring Person (but for the operation of this clause (x))
as a result of the acquisition of Common Shares by the Company, and (2)
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after such share acquisition by the Company, such Person, or an Affiliate
or Associate of such Person, becomes the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed an Acquiring Person, or (y)
if the Board determines in good faith that a Person who would otherwise be
an Acquiring Person, as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned
a percentage of Common Stock that would otherwise cause such Person to be
an Acquiring Person, or (ii) such Person was aware of the extent of its
Beneficial Ownership of Common Shares but had no actual knowledge of the
consequences of such Beneficial Ownership of Common Shares under this
Agreement) and without any intention of changing or influencing control of
the Company, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be
an Acquiring Person as defined pursuant to the foregoing provisions of this
paragraph, then such Person shall not be deemed to be or to have become an
Acquiring Person for any purposes of this Agreement. Notwithstanding
anything in this Agreement to the contrary, (x) no Grandfathered Person
shall be deemed to be an "Acquiring Person" as long as such Grandfathered
Person is not the Beneficial Owner of a number of then outstanding Common
Shares representing in excess of the lesser of (i) the Grandfathered
Percentage or (ii) any percentage of the Common Shares beneficially owned
by such Grandfathered Person in the aggregate at any time after the Record
Date, and (y) any Grandfathered Person who subsequently becomes the
Beneficial Owner of less than 10% of the then outstanding Common Shares
shall cease to be a Grandfathered Person.
(b) "Act" shall mean the Securities Act of 1933, as amended as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and as in effect on
the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own" or have "beneficial ownership" of, any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, including without
limitation securities with respect to which such Person or any of such
Person's Affiliates or Associates has "beneficial ownership" pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act;
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a BONA FIDE public offering of
securities) or upon the exercise of conversion rights, exchange rights,
other rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, or to have beneficial ownership of, any
securities pursuant to subsection (i), (ii) or (iii) of this Section l(d)
solely because such securities are 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
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purchase or exchange, or (B) the right to vote or dispose of pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, or to have beneficial ownership of, any
securities pursuant to subsection (i), (ii) or (iii) of this Section l(d)
solely because of the right to vote such securities pursuant to an
agreement, arrangement or understanding if the agreement, arrangement or
understanding to vote such securities (1) arises solely from a revocable
proxy or consent given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report) as being beneficially owned by such Person; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a
bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
Section l(d)(ii)(B) above) or disposing of any securities of the Company.
Notwithstanding anything in this definition of a Beneficial Owner
to the contrary, the phrase " then outstanding," when used with reference
to a Person's beneficial ownership of securities of the Company, shall mean
the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, U.S. federal holiday or any day on which banking institutions in
the State of New York are authorized or obligated by law or executive order
to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
New York, New York time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., New York, New York time, on
the next succeeding Business Day.
(g) "Common Shares," when used with reference to the Company,
shall mean the shares of Common Stock of the Company with the par value of
$.01 per share (as such par value may be changed from time to time) and, in
the event of a subdivision, combination or consolidation with respect to
such shares of Common Stock, the shares of Common Stock resulting from such
subdivision, combination or consolidation. "Common Shares," when used with
reference to any Person other than the Company, shall mean the capital
stock (or equity interest) with the greatest combined economic and voting
power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such first-
mentioned Person.
(h) "Disinterested Directors" shall mean the members of the Board
who are not (i) employees of the Company, (ii) Acquiring Persons or their
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Affiliates or Associates or representatives of any of them, or (iii) any
Person who was directly or indirectly proposed or nominated as a director
of the Company by a Transaction Person.
(i) "Distribution Date" shall mean the earlier to occur of (i) the
Shares Acquisition Date or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Board) after
the date of the commencement (which intention to commence remains in effect
for five Business Days after such announcement) by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any Person or entity
organized, appointed or established by the Company for or pursuant to the
terms of any such plan) of a tender or exchange offer the consummation of
which would result in any Person becoming an Acquiring Person (including,
in the case of both clauses of this subsection (i) and (ii) above, any such
date which is after the date of this Agreement and prior to the issuance of
the Rights).
(j) "Final Expiration Date" shall mean the Close of Business on
January 11, 2010.
(k) "Grandfathered Percentage" shall mean, with respect to any
Grandfathered Person, a percentage of the Common Shares outstanding from
time to time equal to the percentage that such Grandfathered Person
beneficially owned on the Record Date.
(l) "Grandfathered Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, was, on the
Record Date, the Beneficial Owner of 10% or more of the Common Shares
outstanding on such date.
(m) "Interested Stockholder" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any other Person in
which any such Acquiring Person, Affiliate or Associate has an interest
which represents in excess of 5% of the total combined economic or voting
power of such Person, or any other Person acting directly or indirectly on
behalf of, or in concert with, any such Acquiring Person, Affiliate or
Associate.
(n) "Permitted Offer" shall mean a tender or exchange offer for
all outstanding Common Shares which is at a price and on terms determined,
prior to the purchase of such shares under such tender or exchange offer,
by at least a majority of the Disinterested Directors, to be adequate and
otherwise in the best interests of the Company and its stockholders (other
than the Person, or any Affiliate or Associate thereof, on whose behalf the
offer is being made), taking into account all factors that such
Disinterested Directors may deem relevant.
(o) "Person" shall mean any individual, firm, partnership,
corporation, trust, association, joint venture or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(p) "Preferred Shares" shall mean Series A Participating Preferred
Stock of the Company with the par value of $.01 per share (as such par
value may be changed from time to time) having the preferences, limitations
and relative rights set forth in the Form of Certificate of Designation of
Series A Participating Preferred Stock of the Company attached to this
Agreement as EXHIBIT A.
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(q) "Purchase Price" shall mean the price per one one-thousandth
of a Preferred Share.
(r) "Redemption Date" shall mean the time at which the Rights are
redeemed as provided in Section 23 hereof.
(s) "Redemption Price" shall mean $.01 per Right, which is the
price that the Board may, at its option, redeem all, but not less than all,
of the then outstanding Rights in accordance with the provisions of Section
23(a) hereof.
(t) "Right" shall mean one Preferred Share purchase right.
(u) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)ii) hereof.
(v) "Section 13 Event" shall mean any event described in clause
(i), (ii) or (iii) of Section 13(a) hereof.
(w) "Shares Acquisition Date" shall mean the first date of a
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(x) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
(y) "Transaction" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition of Common
Shares of the Company which would result in a Person becoming a Transaction
Person.
(z) "Transaction Person" with respect to a Transaction shall mean
(i) any Person who (A) is or will become an Acquiring Person if the
Transaction were to be consummated and (B) directly or indirectly proposed
or nominated a director of the Company which director is in office at the
time of consideration of the Transaction, or (ii) an Affiliate or Associate
of such a Person.
(aa) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
(bb) "Voting Securities" shall mean securities of the Company
generally entitled to vote in the election of directors of the Company.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for
the Company and the holders of the Rights (who, in accordance with Section
3 hereof, shall prior to the Distribution Date also be the holders of
Common Shares) in accordance with the terms and conditions hereof, and the
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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.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) The Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall also be deemed
to be Right Certificates and not be separate Right Certificates, and the
right to receive Right Certificates will be transferable only in connection
with the transfer of the underlying Common Shares (including a transfer to
the Company) until the Distribution Date; provided, however, that if the
tender offer is terminated prior to the occurrence of a Distribution Date,
then no Distribution Date shall occur as a result of such tender offer. As
soon as practicable after the Distribution Date, the Company will prepare
and execute, the Rights Agent will countersign and send, or cause to be
sent, by first-class, insured, postage prepaid mail, to each record holder
of Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, substantially in the form of EXHIBIT B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) Following the Record Date, the Company shall send a copy of a
Summary of Rights to Purchase Preferred Shares, in substantially the form
of EXHIBIT C hereto (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the
records of the Company. Upon the execution and delivery of this Agreement,
or as soon as practicable thereafter, the Company shall file with the
Securities and Exchange Commission the full text of this Agreement and the
Summary of Rights. With respect to certificates for Common Shares
outstanding on the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached
thereto. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with such Common Shares.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this Section 3(c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall be deemed also to be certificates for Rights and from
and after the date hereof shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Correctional Services Corporation and
American Stock Transfer & Trust Company, dated as of
January 11, 2000 (the "Rights Agreement"), the terms of
which (including restrictions on the transfer of such
Rights) are hereby incorporated herein by reference and
a copy of which is on file at the principal executive
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offices of Correctional Services Corporation. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Correctional Services Corporation will
mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a
written request therefor from such holder. Under
certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights
Agreement) and certain related persons, whether
currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATE.
(a) The Right Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in EXHIBIT B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of
one one-thousandths of a Preferred Share as shall be set forth therein at
the Purchase Price, but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or 22
hereof that represents Rights which are null and void pursuant to Section
7(e) hereof and any Right Certificate issued pursuant to Section 6 or 11
hereof upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and
the Rights represented hereby are null and void.
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Provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Right Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
The Right Certificates shall be executed on behalf of the Company
by its President or any of its Vice Presidents, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate place for
surrender of such Right Certificate for transfer, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the certificate number and the date of each of the
Right Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATE.
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split-up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split-up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
the Right Certificates to be transferred, split-up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on
the reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to the
provisions of Sections 4(b), 7(e) and 14 hereof, countersign and deliver to
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the Person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE, EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price for the total number on one one-thousandths of a
Preferred Share (or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of (i) the
Final Expiration Date, (ii) the Redemption Date, (iii) the time at which
the Rights are exchanged as provided in Section 24 hereof, or (iv) the
consummation of a transaction contemplated by Section 13(d) hereof.
(b) From and after the date hereof, the Purchase Price for each
one one-thousandth of a Preferred Share pursuant to the exercise of a Right
shall be $30.00, shall be subject to adjustment from time to time as
provided in the next sentence and in Sections 11 and 13(a) hereof and shall
be payable in accordance with Section 7(c) below. Anything in this
Agreement to the contrary notwithstanding, in the event that at any time
after the date hereof and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case, each Common Share outstanding following such
subdivision, combination or consolidation shall continue to have one Right
(subject to adjustment as provided herein) associated therewith and the
Purchase Price following any such event shall be proportionately adjusted
to equal the result obtained by multiplying the Purchase Price immediately
prior to such event by a fraction the numerator of which shall be the total
number of Common Shares outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of Common
Shares outstanding immediately following the occurrence of such event. The
adjustment provided for in the preceding sentence shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
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(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the Preferred
Shares (or other securities, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 6 hereof by
certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent (if the Company, in its sole
discretion, shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights hereunder into a depository) depositary
receipts representing such number of one one-thousandths of a Preferred
Share as are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with such requests, (ii) when appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to the
order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt thereof, deliver such cash to or upon the order
of the registered holder of such Right Certificate. In the event that the
Company is obligated to issue other securities (including Common Shares) of
the Company pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities are available for
distribution by the Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii) hereof, the Rights Agent shall return such
Right Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented by
such Right Certificate no longer include the rights provided by Section
11(a)(ii) hereof and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof, or the Rights Agent shall place an
appropriate notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate thereof, (ii) a transferee of an Acquiring Person (or of an
Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of an Affiliate or Associate thereof) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
10
Person or to any Person with whom the Acquiring Person has a continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonable request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise
(other than a partial exercise), transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
The Company covenants and agrees that at all time prior to the
occurrence of a Section 11(a)(ii) Event it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares, or any
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights and, after the occurrence of a Section 11(a)(ii)
Event, shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other securities)
which may be required to permit the exercise in full of the Rights pursuant
to this Agreement.
So long as the Preferred Shares (and, after the occurrence of
Section 11(a)(ii) Event, Common Shares, or any other securities, as the
case may be) issuable upon the exercise of the Rights may be listed on any
11
national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (or Common
Shares and/or other securities as the case may be) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable
shares or securities.
The Company further covenants and agrees that it will pay when
due and payable any and all U.S. federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates or of any Preferred Shares (or Common Shares and/or
other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right Certificates to
a person other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered
for exercise, or to issue or to deliver any certificates or depositary
receipts for Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of any Rights, until any such tax shall
have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if required by law,
at such earlier time following the Distribution Date as so required), a
registration statement under the Act with respect to the Rights and the
Company's securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights provided by
Section 11(a)(i) hereof. The Company will also take such action as may be
appropriate under the blue sky laws of the various states.
SECTION 10. PREFERRED SHARES RECORD DATE.
Each Person in whose name any certificate for Preferred Shares
(or Common Shares and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become
the holder of record of the Preferred Shares (or Common Shares and/or other
securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided, however,
that, if the date of such surrender payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as the case may
be) transfer books of the Company are closed, such person shall be deemed
to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred
12
Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Company are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER
AND KIND OF SHARES OR NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this Agreement, in the event
any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person, then proper provision shall be
made so that each holder of a Right (except as provided below and
in Section 7(e) hereof shall, for a period of sixty (60) days
after the later of (i) the occurrence of any such event or (ii)
the effective date of an appropriate registration statement under
the Act pursuant to Section 9 hereof, have a right to receive,
upon exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement,
such number of Common Shares (or, in the discretion of the Board,
one one-thousandths of a Preferred Share) as shall equal the
result obtained by (A) multiplying the then current Purchase
Price by the then number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event and (B) dividing
that product by 50% of the then Current Per Share Market Price of
the Company's Common Shares (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of
shares being referred to as the "Adjustment Shares"); provided,
13
however, that if the transaction that would otherwise give rise
to the foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13 hereof
shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii).
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved)
Common Shares to permit the exercise in full of the Rights in
accordance with the foregoing Section 11(a)(ii) and the Rights
become so exercisable (and the Board has determined to make the
Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right
shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, (A) a number of (or fractions of) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (B) a number of one one-thousandths of
a Preferred Share or a number of (or fractions of) other equity
securities of the Company (or, in the discretion of the Board,
debt) which the Board has determined to have the same aggregate
current market value (determined pursuant to Sections 11(d)(i)
and 11(d)(ii) hereof, to the extent applicable) as one Common
Share (such number of (or fractions of) Preferred Shares (or
other equity securities or debt of the Company) being referred to
as a "Capital Stock Equivalent"), equal in the aggregate to the
number of Adjustment Shares; provided, however, if sufficient
Common Shares and/or Capital Stock Equivalents are unavailable,
then the Company shall to the extent permitted by applicable law,
take all such action as may be necessary to authorize additional
Common Shares or Capital Stock Equivalents for issuance upon
exercise of the Rights, including the calling of a meeting of
stockholders; and provided, further, that if the Company is
unable to cause sufficient Common Shares and/or Capital Stock
Equivalents to be available for issuance upon exercise in full of
the Rights, then each Right shall thereafter represent the right
to receive the Adjusted Number of Shares upon exercise at the
Adjusted Purchase Price (as such terms are hereinafter defined).
As used herein, the term "Adjusted Number of Shares" shall be
equal to that number of (or fractions of) Common Shares (and/or
Capital Stock Equivalents) equal to the product of (A) the number
of Adjustment Shares and (B) a fraction, the numerator of which
is the number of Common Shares and/or Capital Stock Equivalents)
available for issuance upon exercise of the Rights and the
denominator of which is the aggregate number of Adjustment Shares
otherwise issuable upon exercise in full of all Rights (assuming
there were a sufficient number of Common Shares available) (such
fraction being referred to as the "Proration Factor"). The
"Adjusted Purchase Price" shall mean the product of the Purchase
Price and the Proration Factor. The Board may, but shall not be
required to, establish procedures to allocate the right to
receive Common Shares and Capital Stock Equivalents upon exercise
of the Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
14
Preferred Shares entitling them (for a period expiring within forty-five
(45) calendar days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights and privileges as the
Preferred Shares (the "Equivalent Preferred Shares") or securities
convertible into Preferred Shares or Equivalent Preferred Shares at a price
per Preferred Share or equivalent preferred share (or having a conversion
price per share, if a security convertible into Preferred Shares or
Equivalent Preferred Shares) less than the then Current Per Share Market
Price of the Preferred Shares (as determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or Equivalent Preferred Shares so
to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Per
Share Market Price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or Equivalent Preferred Shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon the exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent. Preferred Shares owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Per Share Market
Price (as determined pursuant to Section 11(d) hereof) of the Preferred
Shares on such record date, less the fair market value (as determined in
good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such Current Per
Share Market Price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
15
(d) (i) For the purpose of any computation hereunder, the "Current Per
Share Market Price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty consecutive
Trading Days (as hereinafter defined) immediately prior to such date;
provided, however, that in the event that the Current Per Share Market
Price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such security, and prior to the
expiration of thirty (30) Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current
Per Share Market Price shall be appropriately adjusted to reflect the
Current Per Share Market Price equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by The Nasdaq
Stock Market or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker, selected
by the Board, making a market in the Security. If on any such date no such
market maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board shall be
used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a
Business Day. Subject to Section 11(d)(ii) hereof, if any Security is not
publicly held or so listed or traded, the "Current Per Share Market Price"
of such Security shall mean the fair market value per share as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent.
(ii) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of the Preferred Shares shall be
determined in accordance with the method set forth in the
foregoing Section 11(d)(i). If the Preferred Shares are not
publicly traded, the Current Per Share Market Price of the
Preferred Shares shall be conclusively deemed to be the Current
Per Share Market Price of the Common Shares as determined
pursuant to the foregoing Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one
thousand (1,000). If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, the "Current Per
Share Market Price" shall mean the fair value per share as
determined in good faith by the Board, whose determination shall
be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent.
16
(e) Notwithstanding anything herein to the contrary, no adjustment
in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-thousandth
of a Preferred Share or one tenth of any other share or security, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a) (ii) or 13 (a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of other shares so
receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares contained in
Sections 11(a) through 11(c) hereof, inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths
of a Preferred Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and 11(c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a Preferred Share
(calculated to the nearest one ten-thousandth of a Preferred Share)
obtained by (i) multiplying (A) the number of Preferred Shares covered by a
Right immediately prior to this adjustment of the Purchase Price by (B) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
17
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 ten (10) days later than
the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number
of one one-thousandths of a Preferred Share, Common Shares or other
securities issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue such number of fully
paid and nonassessable one one-thousandths of a Preferred Share, Common
Shares or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date the number of one one-thousandths of a Preferred Share, Common
Shares or other securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a Preferred
Share, Common Shares or other securities of the Company, if any, issuable
upon exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary,
the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any (i) consolidation or subdivision of the
18
Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made
by the Company to holders of its Preferred Shares shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which does not violate
Section 11(o) hereof), if (A) at the time of or immediately after such
consolidation, merger, sale or transfer, there are any provisions of the
Company's charter or by-laws or any rights, warrants or other instruments
or any securities outstanding or agreements in effect or other actions
taken that would materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (B) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the stockholders
of the Person who constitutes, or would constitute, the "Principal Party"
(as hereinafter defined) for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company
and such other Person (as the case may be) shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or 27 hereof, take (or
permit any Subsidiary to take) any action the purpose of which is to, or if
at the time such action is taken it is reasonably foreseeable that the
effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p)The exercise of Rights under Section 11(a)(ii) hereof shall
only result in the reduction of rights under Section 11(a)(ii) hereof to
the extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Agreement, including the rights
represented by Section 13 hereof.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares and the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully
19
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (i) the Company shall consolidate with, or
merge with and into, any Interested Stockholder or, if in such merger or
consolidation all holders of Common Shares are not treated alike, any other
Person, (ii) the Company shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all holders
of Common Shares are not treated alike, any other Person, and the Company
shall be the continuing or surviving corporation of such consolidation or
merger (other than, in a case of any transaction described in clause (i) or
(ii) above of this Section 13(a), a merger or consolidation which would
result in all of the Voting Securities outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into securities of the surviving entity) all of the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders (and relative percentage
holdings of each such holder) of such securities not having changed as a
result of such merger or consolidation), (iii) the Company shall effect a
statutory share exchange with outstanding Common Shares of the Company
being exchanged for stock or other securities of any other Person, money or
other property, or (iv) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Interested Stockholder or
Stockholders or, if in such transaction all holders of Common Shares are
not treated alike, any other Person (other than the Company or any
Subsidiary of the Company in one or more transactions each of which does
not violate Section 11(o) hereof), then, and in each such case (except as
provided in Section 13(d) hereof), proper provision shall be made so that
(A) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at a
price equal to the then current Purchase Price, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of
freely tradable Common Shares of the Principal Party, not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of Preferred Share for
which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) hereof) and
dividing that product by (2) 50% of the then Current Per Share Market Price
of the Common Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such Section 13 Event;
(B) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; and (D) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with
the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights.
20
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (i),
(ii) or (iii) of the first sentence of Section 13(a) hereof, the Person
that is the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no securities
are so issued, the Person that is the other party to such merger or
consolidation (including, if applicable, the Company if it is the surviving
corporation); and
(ii) in the case of any transaction described in clause (iv)
of the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the Common
Shares of such Person are not at such time, and have not been continuously
over the preceding twelve (12) month period, registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value; and (3) in
case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly,
by the same Person, the rules set forth in clauses (1) and (2) above of
this Section 13(b) shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a Subsidiary of both
or all of such joint ventures, and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the same ratio
as their direct or indirect interests in such Person bear to the total of
such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in Section 13(a)
and 13(b) hereof and further providing that, as soon as practicable after
the date of any consolidation, merger, sale or transfer mentioned in
Section 13(a) hereof, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing, and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdiction as may be necessary or appropriate; and
21
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction, there
are any provisions of the Company's charter or by-laws or any rights,
warrants, or other instruments or any securities outstanding or agreements
in effect or other actions taken which, as a result of the consummation of
such transaction, would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(e) Notwithstanding anything in this Agreement to the contrary,
the provisions of this Section 13 shall not be applicable to a transaction
described in clauses (i), (ii) or (iii) of Section 13(a) hereof if (A) such
transaction is consummated with a Person or Persons who acquired Common
Shares pursuant to a Permitted Offer (or a wholly owned Subsidiary of any
such Person or Persons), (B) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to all holders
of Common Shares whose shares were purchased pursuant to such Permitted
Offer, and (C) the form of consideration offered in such transaction is the
same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, statutory share exchanges or sales or
other transfers. The rights under this Section 13 shall be in addition to
the rights to exercise Rights and adjustments under Section 11(a)(ii)
hereof and shall survive any exercise thereof.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading
or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market marker, selected by the Board, making a market in
the Rights. If on any such date no such market maker is making a market in
22
the Rights, the fair value of the Rights on such date as determined in good
faith by the Board shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are one one-thousandths or
integral multiples of one one-thousandth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are one one-
thousandths or integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-
thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall
have the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not one one-
thousandths or integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of
one Preferred Share. For the purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to Section 11(d)(ii) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive Common
Shares, Capital Stock Equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Company shall not be required
to issue fractions of shares or units of such Common Shares, Capital Stock
Equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such Common Shares,
Capital Stock Equivalents or other securities. In lieu of fractional
shares or units of such Common Shares, Capital Stock Equivalents or other
securities, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a
share or unit of such Common Shares, Capital Stock Equivalents or other
securities. For purposes of this Section 14(c), the current market value
shall be determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise and, if such
Capital Stock Equivalent is not traded, each such Capital Stock Equivalent
shall have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any
fractional share upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to
23
the Distribution Date, of the Common Shares), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any reach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other holder of
a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate form fully executed;
(c) subject to Sections 6 and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall be required to
be affected by any notice to the contrary;
(d) the Company may issue Rights after the Record Date as provided
in this Agreement; and
(e) 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 beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best efforts
to have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
24
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or other
distributions, or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties hereunder.
The Company also agrees to indemnify the Rights Agent for, and, to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it
in -connection with, its administration of this Agreement in reliance upon
any Right Certificate or certificate for Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons.
SECTION 19. 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 any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or all or substantially all of the
corporate trust business of the Rights Agent or any successor Rights Agent
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of
the parties hereto, provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver
25
such Right Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of
the predecessor or in the name of the successor Rights Agent. In all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned, and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name. In all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person
and the determination of the Current Per Share Market Price of Any
Security) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for, or by reason of, any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates or be required to verify the same (except its
countersignature thereof). All such statements and recitals are, and shall
be deemed to have been made, by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
26
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or 13 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
receipt of the certificate described in Section 12 hereof); nor shall it by
any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or Common Shares
or other securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares or Common Shares or other
securities will, when issued, be validly authorized and issued, fully paid
and nonassessable; nor shall it be under any duty to take any independent
investigation or determination of the identity of any Acquiring Person or
any Affiliate or Associate thereof, but shall be entitled to rely, in the
absence of instructions identifying any such Person, on representations
made by holders of Right Certificates.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company, or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company, or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided, however, reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights hereunder if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
27
(k) If, with respect to any Right Certificates surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the ease may be, has not
been completed, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days'
notice in writing mailed to the Company and to each transfer agent of the
Preferred Shares or Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon sixty (60) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Preferred Shares or
Common Shares by registered or certified mail, and to holders of the Right
Certificates by first-class mail. If the Rights Agent Shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of sixty (60) days after giving notice of
such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United States or any
state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital
and surplus of at least $100,000,000 (or such lower number as approved by
the Board). After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Preferred Shares or Common Shares and
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Board
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this
Agreement.
28
In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earliest of the
Redemption Date, the Final Expiration Date and the consummation of a
transaction contemplated by Section 13(d) hereof, the Company (a) shall,
with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued
by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that no Right Certificates shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) (i) The Board may, at its option, redeem all, but not less
than all, of the then outstanding Rights at the Redemption Price, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof at any time
prior to the earlier of (A) the occurrence of a Section 11(a)(ii) Event or
(B) the Final Expiration Date, and the Company may, at its option, pay the
Redemption Price either in Common Shares (based on the Current Per Share
Market Price as defined in Section 11(d) hereof, of the Common Shares at
the time of redemption) or cash; provided, however, that if the Company
elects to pay the Redemption Price in Common Shares, the Company shall not
be required to issue any fractional Common Shares, and the number of Common
Shares issuable to each holder of Rights shall be rounded down to the next
whole share.
(ii) In addition, the Board may, at its option, at any time
following a Shares Acquisition Date but prior to any Section 13 Event
redeem all, but not less than all, of the then outstanding Rights at the
Redemption Price in connection with any Section 13 Event (A) in which all
holders of Common Shares are treated alike and (B) not involving (other
than as a holder of Common Shares being treated like all other such
holders) a Transaction Person.
(b) In the case of a redemption permitted under Section 23(a)(i)
hereof, immediately upon the date for redemption set forth in (or
determined in the manner specified in) a resolution of the Board ordering
the redemption of the Rights, evidence of which shall have been filed with
the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. In the case of a redemption permitted only
under Section 23(a)(ii) hereof, evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price upon the later of
ten Business Days following the giving of notice or the expiration of any
period during which the rights under Section 11(a)(ii) hereof may be
exercised. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. Within
ten (10) days after such date for redemption set forth in a resolution of
the Board ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the
29
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
(c) In the case of a redemption permitted under Section 23(a)(i)
hereof, the Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the
manner of redemption of the Rights in accordance with this Agreement and
(ii) mailing payment of the Redemption Price to the registered holders of
the Rights at their last addresses as they appear on the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books
of the Transfer Agent of the Common Shares, and upon such action, all
outstanding Rights and Right Certificates shall be null and void without
any further action by the Company.
(d) The Board and the Company shall not have any liability to any
Person as a result of the redemption of Rights pursuant to the terms of
this Section 23.
SECTION 24. EXCHANGE.
(a) The Board may, at its option, at any time after the time that
any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Sections 7(e) and 11(a)(ii)
hereof) for Common Shares of the Company at an exchange ratio of one and
three-quarters (1 3/4) Common Shares per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction involving
either the Common Shares or the Preferred Shares occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be empowered
to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, any entity holding Common Shares for or
pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board ordering the exchange
of any Rights pursuant to Section 24(a) hereof and without any further
action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be
to receive that number of Common Shares equal to the number of such rights
held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall promptly mail a notice of any
such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
30
effected PRO RATA based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Sections 7(e) and 11(a) (ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Shares (or Equivalent Preferred
Shares) for some or all of the Common Shares exchangeable for Rights, at
the initial rate of one-thousandth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant
to the terms thereof, so that the fraction of a Preferred Share delivered
in lieu of each Common Share shall have the same voting rights as one
Common Share.
(d) The Board shall not authorize any exchange transaction
referred to in Section 24(a) hereof unless at the time such exchange is
authorized there shall be sufficient Common Shares or Preferred Shares
issued but not outstanding, or authorized but unissued, to permit the
exchange of Rights as contemplated in accordance with this Section 24.
(e) The Board and the Company shall not have any liability to any
Person as a result of the exchange of Rights pursuant to the terms of this
Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of its Preferred Shares (other
than a regularly quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which does not violate Section
11(o) hereof), or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such
proposed action to the extent feasible and file a certificate with the
Rights Agent to that effect, which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if
any such date is to be fixed. Such notice shall be so given in the case of
any action covered by clause (i) or (ii) above of this Section 25(a) at
least twenty (20) days prior to the record date for determining holders of
the Preferred Shares for purposes of such action, and in the case of any
such other action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Shares, whichever shall be the earlier.
31
(b) In case of a Section 11(a)(ii) Event then (i) the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a) (ii)
hereof and (ii) all references in the foregoing Section 25 (a) to Preferred
Shares shall be deemed thereafter to refer also, if appropriate, to Common
Shares and/or, if appropriate, other securities of the Company.
SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right Certificate to or on
the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, and addressed (until another address is filed in
writing with the Rights Agent) as follows:
Correctional Services Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
and addressed (until another address is filed in writing with the Company)
as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right
Certificate or, if prior to the Distribution Date, to the holder of
certificates representing Common Shares, shall be sufficiently given or
made if sent by first-class mail, postage prepaid, and addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
Common Shares. From and after the Distribution Date, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate thereof);
32
provided, however, that this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or
amendment, provided that such supplement or amendment does not adversely
affect the rights or obligations of the Rights Agent under Section 18 or 20
of this Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD, ETC.
The Board shall have the exclusive power and total and complete
authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to: (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to amend
the Agreement and whether any proposed amendment adversely affects the
interests of the holders of Right Certificates). For all purposes of this
Agreement, any calculation of the number of Common Shares or other
securities outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares or
any other securities of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(l)(i) of the
General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement. All such actions, calculations, interpretations
and determinations (including for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the
Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all
other parties, and (y) not subject the Board to any liability to the
holders of the Right Certificates.
SECTION 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT.
This Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares), and
nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement.
33
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by such court
or authority to be invalid, void or unenforceable, and the Board of the
Company determines, at a time when a majority of the directors then serving
are Disinterested Directors, in their good-faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board.
SECTION 32. GOVERNING LAW.
This Agreement, each Right and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State
of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to
be performed entirely within such State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and
the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
[remainder of page intentionally left blank]
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
CORRECTIONAL SERVICES CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
35
EXHIBIT B
---------
Form of Right Certificate
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER JANUARY 11, 2010, OR EARLIER IF
REDEEMED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED
IN THE RIGHTS AGREEMENT) AND CERTAIN RELATED PERSONS,
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND
VOID.
RIGHT CERTIFICATE
CORRECTIONAL SERVICES CORPORATION
This certifies that ___________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January 11, 2000, (the
"Rights Agreement"), between Correctional Services Corporation, a Delaware
corporation (the "Company"), and American Stock Transfer & Trust Company, a
banking corporation organized under the laws of the State of New York (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term in defined in the Rights Agreement) and
prior to 5:00 P.M., New York, New York time, on January 11, 2010, unless
the Rights evidenced hereby shall have been previously redeemed by the
Company, at the principal office or offices of the Rights Agent designated
for such purpose, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A
Participating Preferred Stock, with a par value of $.0l per share (the
"Preferred Shares"), of the Company, at a purchase price of $30.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a Preferred
Share that may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are, except for adjustments required
pursuant to the Rights Agreement, the number and Purchase Price as of the
Record Date, based on the Preferred Shares as constituted at such date.
B-1
Upon the occurrence of a Section 11 (a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person (or of an
Associate of Affiliate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of any such Acquiring
Person (or of an Associate of Affiliate thereof) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such, such
Rights shall become null and void and no holder hereof shall have any
rights whatsoever with respect to such Rights from and after the occurrence
of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandths of a Preferred Share or other securities that
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events (as such term is defined in
the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares or other securities as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a
redemption price of $.0l per Right (subject to adjustment as provided in
the Rights Agreement) payable in Common Shares or cash.
The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right as defined in the Rights Agreement.
The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are one one-thousandths or integral
B-2
multiples of one one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share). In lieu of
fractional Preferred Shares other than fractions that are multiples of one
one-thousandth of a Preferred Share, the Company will pay to the registered
holders of Right Certificates at the time such Rights are exercised an
amount in cash equal to the same fraction of the current market value of
one Preferred Share as defined in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and
its corporate seal. Dated as of ____________, __________.
(SEAL)
ATTEST: CORRECTIONAL SERVICES CORPORATION
By: By:
------------------------- -------------------------------
Name: Name:
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:
-------------------------
Name:
Title:
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
_____________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint Attorney, to
transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________, ___________.
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association, credit
union or trust company having an office or correspondent in the United
States or other eligible guarantor institution which is a participant in a
signature guarantee medallion program.
___________________________________________________________________________
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
________________________________
Signature
B-4
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise Rights represented
by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares,
Common Shares or such other securities issuable upon the exercise of such
Rights at this time as follows:
Please Insert
Number of Rights
To Be Exercised
(i) Preferred Shares Exercise __________________
(ii) Section 11(a)(ii) Exercise __________________
(iii) Section 13 Exercise __________________
The undersigned requests that certificates for such Preferred
Shares, Common Shares or other securities be issued in the name of:
Please insert social security or other identifying number
-----------------
--------------------------------------------
(Please print name and address of transferee)
___________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
-----------------
___________________________________________
(Please print name and address of transferee)
___________________________________________
Dated: ____________, ______.
________________________________
Signature
B-5
Form of Reverse Side of Right Certificate -- continued
SIGNATURE GUARANTEED: SIGNATURES MUST BE GUARANTEED BY A MEMBER
FIRM OF A REGISTERED NATIONAL SECURITIES EXCHANGE, A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC., OR A COMMERCIAL BANK, SAVINGS
ASSOCIATION, CREDIT UNION OR TRUST COMPANY HAVING AN OFFICE OR
CORRESPONDENT IN THE UNITED STATES OR OTHER ELIGIBLE GUARANTOR INSTITUTION
WHICH IS A PARTICIPANT IN A SIGNATURE GUARANTEE MEDALLION PROGRAM.
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and (2) after due inquiry
and to the best knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
________________________________
Signature
NOTICE
THE SIGNATURE ON THE FOREGOING FORMS OF ASSIGNMENT AND ELECTION
AND CERTIFICATES MUST CONFORM TO THE NAME AS WRITTEN UPON THE FACE OF THIS
RIGHT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER.
IN THE EVENT THE CERTIFICATION SET FORTH ABOVE IN THE FORM OF
ASSIGNMENT OR THE FORM OF ELECTION TO PURCHASE, AS THE CASE MAY BE, IS NOT
COMPLETED, THE COMPANY AND THE RIGHTS AGENT WILL DEEM THE BENEFICIAL OWNER
OF THE RIGHTS EVIDENCED BY THIS RIGHT CERTIFICATE TO BE AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND SUCH ASSIGNMENT OR ELECTION TO PURCHASE WILL NOT BE
HONORED.
B-6
