EXHIBIT 4.1
RENTRAK CORPORATION
and
U.S. STOCK TRANSFER CORPORATION
as Rights Agent
Rights Agreement
Dated as of May 18, 2005
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT......................................4
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES...................................4
3.1 Rights Evidenced by Share Certificates...........................4
3.2 Summary of Rights................................................5
3.3 New Certificates After Record Date...............................5
SECTION 4. FORM OF RIGHT CERTIFICATES.......................................6
SECTION 5. COUNTERSIGNATURE AND REGISTRATION................................6
SECTION 6. TRANSFER OF RIGHT CERTIFICATES; DESTROYED OR LOST RIGHT
CERTIFICATES.....................................................6
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE..............7
7.1 Exercise of Rights...............................................7
7.2 Purchase.........................................................7
7.3 Payment Procedures...............................................7
7.4 Partial Exercise.................................................8
7.5 Full Information Concerning Ownership............................8
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES...............8
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK....................9
SECTION 10. PREFERRED SHARES RECORD DATE....................................10
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS................................................10
11.1 Post-Execution Events...........................................10
11.2 Dilutive Rights Offering........................................12
11.3 Distributions...................................................13
11.4 Current Per Share Market Value..................................13
11.5 Insignificant Changes...........................................14
11.6 Shares Other Than Preferred Shares..............................14
11.7 Rights Issued Prior to Adjustment...............................15
11.8 Effect of Adjustments...........................................15
11.9 Adjustment in Number of Rights..................................15
11.10 Right Certificates Unchanged....................................15
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TABLE OF CONTENTS
(continued)
Page
11.11 Par Value Limitations...........................................15
11.12 Deferred Issuance...............................................16
11.13 Reduction in Purchase Price.....................................16
11.14 Company Not to Diminish Benefits of Rights......................16
11.15 Adjustment of Rights Associated With Common Shares..............16
SECTION 12. CERTIFICATE OF ADJUSTMENTS......................................16
SECTION 13. CONSOLIDATION, MERGER OR SALE OF ASSETS.........................17
13.1 Certain Transactions............................................17
13.2 Principal Party.................................................19
13.3 Approved Acquisitions...........................................19
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.........................20
14.1 Cash in Lieu of Fractional Rights...............................20
14.2 Cash in Lieu of Fractional Preferred Shares.....................20
14.3 Cash in Lieu of Fractional Common Shares........................20
14.4 Waiver of Right to Receive Fractional Rights or Shares..........21
SECTION 15. RIGHTS OF ACTION................................................21
SECTION 16. AGREEMENT OF RIGHT HOLDERS......................................21
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER...............21
SECTION 18. CONCERNING THE RIGHTS AGENT.....................................22
SECTION 19. MERGER OR CHANGE OF NAME OF RIGHTS AGENT........................22
SECTION 20. DUTIES OF RIGHTS AGENT..........................................22
20.1 Legal Counsel...................................................23
20.2 Certificates as to Facts or Matters.............................23
20.3 Standard of Care................................................23
20.4 Reliance on Agreement and Right Certificates....................23
20.5 No Responsibility as to Certain Matters.........................23
20.6 Further Assurance by Company....................................23
20.7 Authorized Company Officers.....................................23
20.8 Freedom to Trade in Company Securities..........................24
20.9 Reliance on Attorneys and Agents................................24
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TABLE OF CONTENTS
(continued)
Page
20.10 Incomplete Certificate..........................................24
20.11 Rights Holders List.............................................24
SECTION 21. CHANGE OF RIGHTS AGENT..........................................24
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES..............................25
SECTION 23. REDEMPTION......................................................25
23.1 Right to Redeem.................................................25
23.2 Redemption Procedures...........................................26
SECTION 24. NOTICE OF CERTAIN EVENTS........................................26
SECTION 25. NOTICES.........................................................27
SECTION 26. SUPPLEMENTS AND AMENDMENTS......................................28
SECTION 27. EXCHANGE........................................................28
27.1 Exchange of Common Shares for Rights............................28
27.2 Exchange Procedures.............................................28
27.3 Insufficient Shares.............................................29
SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS.............29
SECTION 29. MISCELLANEOUS PROVISIONS........................................29
29.1 Successors......................................................29
29.2 Benefits of this Agreement......................................29
29.3 Severability....................................................29
29.4 Governing Law...................................................29
29.5 Counterparts....................................................30
29.6 Descriptive Headings............................................30
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of May 18, 2005 ("Agreement"),
between RENTRAK CORPORATION, an Oregon corporation (the "Company"), and U.S.
STOCK TRANSFER CORPORATION, as Rights Agent (the "Rights Agent").
RECITALS
WHEREAS, on May 6, 2005, the Board of Directors of the Company
adopted this Agreement, and has authorized and declared a dividend of one
preferred share purchase right (a "Right") for each Common Share (as defined in
Section 1.6) of the Company outstanding at the close of business on May 18, 2005
(the "Record Date"), and has authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each Common Share
that shall become outstanding between the Record Date and the earliest of the
Distribution Date and the Expiration Date (as such terms are defined in Sections
3.1 and 7.1);
WHEREAS, each Right initially represents the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock (the
"Preferred Shares") of the Company having the rights, powers and preferences set
forth in the form of Amendment to Articles of Incorporation of the Company
designating the terms of Series A Junior Participating Preferred Stock attached
hereto as Exhibit A, upon the terms and subject to the conditions set forth in
this Agreement.
Capitalized terms used but not defined below are used with the
meanings given in Section 1 or in the text of this Agreement as cross-referenced
in Section 1.12 below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
AGREEMENT
SECTION 1 Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:
1.1 "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 15%
or more of the Common Shares of the Company then outstanding but shall not
include an Exempt Person. Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided, however, that if
a Person shall become the Beneficial Owner of 15% or more of the Common Shares
of the Company then outstanding solely by reason of share purchases by the
Company and shall, after such share purchases by the Company and during such
time as such Person continues to beneficially own 15% or more of the Common
Shares then outstanding, become the Beneficial Owner of additional Common Shares
of the Company (other than pursuant to a dividend or distribution of Common
Shares or a split or subdivision of the outstanding Common Shares), then such
Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined above,
has become such inadvertently (including, without limitation, because (a) such
Person was unaware that it beneficially owned a percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person" or (b) such Person
was aware of the extent of its
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Beneficial Ownership of Common Shares but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement), 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, then such Person shall not
be deemed to be or have become an "Acquiring Person" at any time for any
purposes of this Agreement.
1.2 "Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
1.3 A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) Which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement);
(ii) Which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether such
right is exercisable immediately, or only after the passage of time, compliance
with regulatory requirements, fulfillment of a condition or otherwise) 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, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (w) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (x) securities which such Person has a right to acquire
upon the exercise of Rights at any time prior to the time that any Person
becomes an Acquiring Person, (y) securities issuable upon the exercise of Rights
from and after the time that any Person becomes an Acquiring Person if such
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3.1 or Section
22 ("Original Rights") or pursuant to Section 11.9 or Section 11.15 with respect
to an adjustment to Original Rights or (z) securities which such Person or any
of such Person's Affiliates or Associates may acquire, does or do acquire or may
be deemed to acquire or may be deemed to have the right to acquire, pursuant to
any merger or other acquisition agreement between the Company and such Person
(or one or more of such Person's Affiliates or Associates) if such agreement has
been approved by the Board of Directors of the Company prior to such Person's
becoming an Acquiring Person; or (B) the right to vote 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, any security under this clause (B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) Which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) and with respect to 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), whether or not in writing, for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to Section 1.3(b)) or disposing of any securities of the Company;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be
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deemed, solely by reason of such Person's status as such, to be the "Beneficial
Owner" of, any securities that are "beneficially owned" (as defined in this
Section 1.3), including, without limitation, in a fiduciary capacity, by an
Exempt Person or by any other such officer, director or employee of an Exempt
Person.
1.4 "Business Day" means any day other than a Saturday, Sunday, or a day
on which banking institutions in the State of Oregon are authorized or obligated
by law or executive order to close.
1.5 "close of business" on any given date means 5:00 p.m., Oregon time, on
such date; provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m., Oregon time, on the next succeeding Business Day.
1.6 "Common Shares" when used with reference to the Company means the
shares of common stock, par value $.001 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management, of such
other Person or, if such Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person, and which has
issued and outstanding such capital stock, equity securities or equity interest.
1.7 "Exempt Person" means the Company, any Subsidiary of the Company, or
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity or trustee holding shares of capital stock of the Company for or
pursuant to the terms of any such plan.
1.8 "Person" means any individual, partnership, joint venture, limited
liability company, corporation, unincorporated association, trust or other
entity, and shall include any successor (by merger or otherwise) of such entity.
1.9 "Shares Acquisition Date" means the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, the
filing of a report pursuant to Section 13(d) of the Exchange Act or pursuant to
a comparable successor statute) by the Company or an Acquiring Person that an
Acquiring Person has become such or that discloses information which reveals the
existence of an Acquiring Person.
1.10 "Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interests is owned, of record or beneficially, directly or indirectly, by such
Person.
1.11 A "Trigger Event" shall be deemed to have occurred upon any Person
becoming an Acquiring Person.
1.12 The following terms shall have the meanings defined for such terms in
the sections set forth below:
Term Section
Adjustment Shares Section 11.1.2
Agreement Recitals
common stock equivalent Section 11.1.3
Company Recitals
current per share market price Section 11.4.1
Current Value Section 11.1.3
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Distribution Date Section 3.1
equivalent preferred stock Section 11.2
Exchange Act Section 1.2
Exchange Consideration Section 27
Expiration Date Section 7.1
Final Expiration Date Section 7.1
Nasdaq Section 9
NYSE Section 11.4.1
Original Rights Section 1.3
Preferred Shares Recitals
Principal Party Section 13.2
Purchase Price Section 4
Record Date Recitals
Redemption Date Section 7.1
Redemption Price Section 23.1
Right Recitals
Right Certificate Section 3.1
Rights Agent Recitals
Security Section 11.4.1
Spread Section 11.1.3
Substitution Period Section 11.1.3
Summary of Rights Section 3.2
Trading Day Section 11.4.1
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, shall
prior to the Distribution Date also be the holders of the Common Shares) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable. In the event the Company
appoints one or more co-Rights Agents, the respective duties of the Rights Agent
and any co-Rights Agent shall be as the Company shall determine.
Contemporaneously with such appointment, if any, the Company shall notify the
Rights Agent thereof.
SECTION 3. Issuance of Right Certificates.
3.1 Rights Evidenced by Share Certificates. Until the earlier of (a) the
10th day after the Shares Acquisition Date or (b) the 10th Business Day after
the date of the commencement of, or first public announcement of the intent of
any Person (other than an Exempt Person) to commence, a tender or exchange offer
the consummation of which would result in any Person (other than an Exempt
Person) becoming the Beneficial Owner of Common Shares aggregating 15% or more
of the then outstanding Common Shares of the Company (the earlier of (a) and (b)
being herein referred to as the "Distribution Date"), (x) the Rights (unless
earlier expired, redeemed or terminated) will be evidenced (subject to the
provisions of Section 3.2) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates for Common Shares shall
also be deemed to be Right Certificates) and not by separate certificates, and
(y) the Rights (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying Common
Shares. The preceding sentence notwithstanding, prior to the occurrence of a
Distribution Date under clause (b) (or such later Distribution Date as the Board
of Directors of the Company may select pursuant to this sentence), the Board of
Directors may postpone, one or more times, the Distribution Date which would
occur as a result of an
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event described in clause (b) beyond the date set forth in such clause (b).
Nothing herein shall permit such a postponement of a Distribution Date after a
Person becomes an Acquiring Person. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company (or, if requested, the Rights Agent) will send, by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Distribution Date (other than any Acquiring Person
or any Associate or Affiliate of an Acquiring Person), at the address of such
holder shown on the records of the Company, one or more certificates for Rights,
in substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right (subject to adjustment as provided herein) for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
3.2 Summary of Rights. The Company will make available a copy of a Summary
of Rights to Purchase Preferred Shares, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), to any holder of Rights who may
so request from time to time prior to the Expiration Date. With respect to
certificates for Common Shares outstanding as of the close of business on the
Record Date, until the Distribution Date (or the earlier Expiration Date), the
Rights will be evidenced by such certificates for Common Shares registered in
the names of the holders thereof together with a copy of the Summary of Rights
and the registered holders of the Common Shares shall also be registered holders
of the associated Rights. Until the Distribution Date (or the earlier Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding at the close of business on the Record Date, with or without a copy
of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
3.3 New Certificates After Record Date. Certificates for Common Shares
which become outstanding (whether upon issuance out of authorized but unissued
Common Shares or transfer or exchange of outstanding Common Shares) after the
Record Date but prior to the earliest of the Distribution Date or the Expiration
Date, shall have printed, stamped or otherwise affixed onto them the following
legend:
This certificate also evidences and entitles the holder to certain
rights as set forth in a Rights Agreement, dated as of May 18, 2005,
between Rentrak Corporation, an Oregon corporation ("Rentrak"), and U.S.
Stock Transfer Corporation, as Rights Agent, as amended from time to time
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Rentrak. 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. Rentrak
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. As described
in the Rights Agreement, rights which are owned by, transferred to or have
been owned by Acquiring Persons or Associates or Affiliates thereof (as
defined in the Rights Agreement) shall become null and void and will no
longer be transferable.
With respect to certificates containing the foregoing legend, until
the Distribution Date (or the earlier Expiration 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
certificates, except as otherwise provided herein, 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
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Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired.
Notwithstanding this Section 3.3, the failure to include a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
SECTION 4. Form of Right Certificates.
The Right Certificates (and the forms of election to purchase
shares, certification and assignment to be printed on the reverse thereof) shall
be substantially the same as 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 or trading system on which the Rights
may from time to time be listed or quoted, or to conform to usage. Subject to
the terms and conditions hereof, the Right Certificates, whenever issued, shall
be dated as of the Record Date, and shall show the date of countersignature by
the Rights Agent, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to adjustment as
provided in this Agreement.
SECTION 5. Countersignature and Registration.
The Right Certificates shall be executed on behalf of the Company by
its Chief Executive Officer, President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be countersigned, either manually or by facsimile signature,
by an authorized signatory of the Rights Agent, but it shall not be necessary
for the same signatory to countersign all of the Right Certificates hereunder.
No Right Certificate shall be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this 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 principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. Transfer of Right Certificates; Destroyed or Lost Right Certificates.
Subject to the provisions of Section 11.1.2 and Section 14, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
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void pursuant to Section 11.1.2 or that have been exchanged pursuant to Section
27) may be transferred, split up or combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of one one-hundredths of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up or combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender, together with any required form of assignment and
certificate duly completed, the Right Certificate or Right Certificates to be
transferred, split up or combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates 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 or Right Certificates
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 countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment from the holders of Right Certificates of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up or combination or exchange of such Right Certificates.
Subject to the provisions of Section 11.1.2, at any time after the
Distribution Date and prior to the Expiration Date, 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 to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date.
7.1 Exercise of Rights. Subject to the provisions of Section 11.1.2 and
except as otherwise provided herein, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby in whole or in part at any
time after the Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase and certification on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for the
total number of one one-hundredths of a Preferred Share (or other securities,
cash or other assets) as to which the Rights are exercised, at or prior to the
time (the "Expiration Date") that is the earliest of (a) the close of business
on May 18, 2015 (the "Final Expiration Date"), (b) the time at which the Rights
are redeemed as provided in Section 23 (the "Redemption Date"), (c) the closing
of any merger or other acquisition transaction involving the Company pursuant to
an agreement of the type described in Section 13.3 at which time the Rights are
deemed terminated, or (d) the time at which the Rights are exchanged as provided
in Section 27.
7.2 Purchase. The Purchase Price for each one one-hundredth of a Preferred
Share pursuant to the exercise of a Right initially shall be $50.00, shall be
subject to adjustment from time to time as provided in Section 11, Section 13,
and Section 26, and shall be payable in lawful money of the United States of
America in accordance with Section 7.3.
7.3 Payment Procedures. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and certification duly
executed, accompanied by payment of the aggregate Purchase Price for the total
number of one one-hundredths of a Preferred Share to be purchased
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and an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9, in cash or by
certified or cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (a)(1) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) 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 (2) if the Company shall have elected to deposit the total
number of Preferred Shares issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depositary agent depositary receipts
representing interests in such number of one one-hundredths 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 hereby directs the depositary agent to comply
with all such requests, (b) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 14 or otherwise in accordance with Section 11.1.3, (c)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (d) when appropriate, after receipt, promptly 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 of the Company, pay cash
and/or distribute other property pursuant to Section 11.1.3, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
7.4 Partial Exercise. 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 and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14.
7.5 Full Information Concerning Ownership. 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 of
Rights upon the occurrence of any purported exercise as set forth in this
Section 7 unless the certificate contained in the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
exercise shall have been duly completed and signed by the registered holder
thereof and the Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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SECTION 9. Reservation and Availability of Capital Stock.
The Company covenants and agrees that from and after the
Distribution Date it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares (and, following the occurrence of a
Trigger Event, out of its authorized and unissued Common Shares or other
securities) the number of Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence of a
Trigger Event, Common Shares and/or other securities) issuable upon the exercise
of Rights may be listed on any national securities exchange or quoted on the
Nasdaq Stock Market ("Nasdaq") or the OTC Bulletin Board(TM), 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 or admitted to
trading on such exchange or quoted on such market 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 (and, following the
occurrence of a Trigger Event, Common Shares and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities or
"Blue Sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the date as of which the Rights are no longer
exercisable for such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 120 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall have been declared effective.
The Company further covenants and agrees that it will pay when due
and payable any and all Federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any 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 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 deliver any certificates for Preferred Shares (or Common Shares and/or
other securities, as the case may be) in a name other than that of the
registered holder 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
satisfaction that no such tax is due.
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SECTION 10. Preferred Shares Record Date.
Each person in whose name any certificate for Preferred Shares (or
Common Shares and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares (or Common Shares and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote or to receive dividends or other distributions, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
expressly provided herein.
SECTION 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number of Preferred Shares or other
securities or property purchasable upon exercise of each Right, and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
11.1 Post-Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In the event the
Company shall at any time after the date of this Agreement (i) declare and pay a
dividend on the Preferred Shares payable in Preferred Shares, (ii) subdivide the
outstanding Preferred Shares, (iii) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (iv) 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 11.1, 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, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both Section 11.1.1 and Section 11.1.2, the adjustment provided
for in this Section 11.1.1 shall be in addition to, and shall be made prior to,
the adjustment required pursuant to, Section 11.1.2.
11.1.2 Acquiring Person Events; Trigger Events. Subject to Section
23.1 and Section 27, in the event that a Trigger Event occurs, then, from and
after the first occurrence of such event, each holder of a Right, except as
provided below, shall thereafter have a right to receive, upon exercise thereof
at a price per Right equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable (without giving effect to this Section 11.1.2), in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of a Preferred
Share for which a Right is then exercisable
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(without giving effect to this Section 11.1.2) and (y) dividing that product by
50% of the current per share market price of the Common Shares (determined
pursuant to Section 11.4) on the first of the date of the occurrence of, or the
date of the first public announcement of, a Trigger Event (the "Adjustment
Shares"); provided that the Purchase Price and the number of Adjustment Shares
shall thereafter be subject to further adjustment as appropriate in accordance
with Section 11.6. Notwithstanding the foregoing, upon the occurrence of a
Trigger Event, any Rights that are or were acquired or beneficially owned by (1)
any Acquiring Person or any Associate or Affiliate thereof, (2) a transferee of
any Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (3) a transferee of any
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of this Section 11.1.2, and subsequent
transferees, shall become void without any further action, and any holder
(whether or not such holder is an Acquiring Person or an Associate or Affiliate
of an Acquiring Person) of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement or otherwise. From
and after the Trigger Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 that represents Rights that are or have become void
pursuant to the provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have become
void pursuant to the provisions of this paragraph shall be canceled.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 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 any Acquiring Person or its
Affiliates, Associates or transferees hereunder.
From and after the occurrence of an event specified in Section 13.1,
any Rights that theretofore have not been exercised pursuant to this Section
11.1.2 shall thereafter be exercisable only in accordance with Section 13 and
not pursuant to this Section 11.1.2.
11.1.3 Insufficient Shares. The Company may at its option substitute
for a Common Share issuable upon the exercise of Rights in accordance with the
foregoing Section 11.1.2 a number of Preferred Shares or fraction thereof such
that the current per share market price of one Preferred Share multiplied by
such number or fraction is equal to the current per share market price of one
Common Share. In the event that upon the occurrence of a Trigger Event there
shall not be sufficient Common Shares authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing Section 11.1.2,
the Company shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the Rights; provided,
however, that if the Company determines that it is unable to cause the
authorization of a sufficient number of additional Common Shares, then, in the
event the Rights become exercisable, the Company, with respect to each Right and
to the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date hereof to which it is a party, shall: (1)
determine the excess of (A) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), over (B) the Purchase Price (such
excess, the "Spread") and (2) with respect to each Right (other than Rights
which have become void pursuant to Section 11.1.2), make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Purchase
Price, (A) cash, (B) a reduction in the Purchase Price, (C) Preferred Shares or
other equity securities of the Company (including, without limitation, shares,
or fractions of shares, of preferred stock which the Board of Directors of the
Company has deemed in good faith to have substantially the same value as Common
Shares) (each such share of preferred stock
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constituting a "common stock equivalent"), (D) debt securities of the Company,
(E) other assets, or (F) any combination of the foregoing having an aggregate
value equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a nationally
or regionally recognized investment banking firm selected in good faith by the
Board of Directors of the Company; provided, however, that if the Company shall
not have made adequate provision to deliver value pursuant to clause (2) above
within 30 days following the occurrence of a Trigger Event, then the Company
shall be obligated to deliver, to the extent necessary and permitted by
applicable law and any agreements or instruments in effect on the date hereof to
which it is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, such number or fractions of Preferred Shares (to the
extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is unlikely that sufficient additional
Common Shares could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended and re-extended to the
extent necessary, but not more than 90 days following the occurrence of a
Trigger Event, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period as may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action needs to be taken pursuant to the second and/or third sentences of this
Section 11.1.3, the Company (x) shall provide that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11.1.3, the
value of a Common Share shall be the current per share market price (as
determined pursuant to Section 11.4) on the date of the occurrence of a Trigger
Event and the value of any "common stock equivalent" shall be deemed to have the
same value as the Common Shares on such date. The Board of Directors of the
Company may, but shall not be required to, establish procedures to allocate the
right to receive Common Shares upon the exercise of the Rights among holders of
Rights pursuant to this Section 11.1.3.
11.2 Dilutive Rights Offering. In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or securities having
the same rights, privileges and preferences as the Preferred Shares ("equivalent
preferred stock")) or securities convertible into Preferred Shares or equivalent
preferred stock at a price per Preferred Share or per share of equivalent
preferred stock (or having a conversion or exercise price per share, if a
security convertible into or exercisable for Preferred Shares or equivalent
preferred stock) less than the current per share market price of the Preferred
Shares (as determined pursuant to Section 11.4) 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
and shares of equivalent preferred stock outstanding on such record date plus
the number of Preferred Shares and shares of equivalent preferred stock which
the aggregate offering price of the total number of Preferred Shares and/or
shares of equivalent preferred stock 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 and shares of equivalent preferred stock outstanding
on such record date plus the number of additional Preferred Shares and/or shares
of equivalent preferred stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the
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Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Preferred Shares and shares of equivalent preferred stock owned by or
held for the account of the Company or any Subsidiary shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such rights 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.
11.3 Distributions. 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, cash, securities or assets (other than a regular periodic cash
dividend at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Preferred Shares (which dividend, for purposes of this Agreement, shall be
subject to the provisions of Section 11.1.1(i))) or convertible securities, or
subscription rights or warrants (excluding those referred to in Section 11.2),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price of the Preferred Shares (as determined pursuant to Section 11.4) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets, securities 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 (as determined
pursuant to Section 11.4). 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.
11.4 Current Per Share Market Value.
11.4.1 General. For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11.4.1) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Security is determined during any period following the announcement by the
issuer of such Security of (i) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares or
(ii) any subdivision, combination or reclassification of such Security, and
prior to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current per share market
price" shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange
("NYSE") or, if the Security is not listed or admitted to trading on the NYSE,
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 as reported by Nasdaq or such
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other system then in use, or, if on any such date the Security is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. 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 determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" means a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day. If the Security is not publicly held or not so listed or traded, or if on
any such date the Security is not so quoted and no such market maker is making a
market in the Security, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company or, if at the time of such determination there is an Acquiring Person,
by a nationally or regionally recognized investment banking firm selected by the
Board of Directors, which shall have the duty to make such determination in a
reasonable and objective manner, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
11.4.2 Preferred Shares. Notwithstanding Section 11.4.1, for the
purpose of any computation hereunder, the "current per share market price" of
the Preferred Shares shall be determined in the same manner as set forth above
in Section 11.4.1 (other than the last sentence thereof). If the current per
share market price of the Preferred Shares cannot be determined in the manner
described in Section 11.4.1, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Shares occurring
after the date of this Agreement) multiplied by the current per share market
price of the Common Shares (as determined pursuant to Section 11.4.1). If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, or if on any such date neither the Common Shares nor the
Preferred Shares are so quoted and no such market maker is making a market in
either the Common Shares or the Preferred Shares, "current per share market
price" of the Preferred Shares shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, or, if at the time of
such determination there is an Acquiring Person, by a nationally or regionally
recognized investment banking firm selected by the Board of Directors of the
Company, which shall have the duty to make such determination in a reasonable
and objective manner, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For
purposes of this Agreement, the "current per share market price" of one
one-hundredth of a Preferred Share shall be equal to the "current per share
market price" of one Preferred Share divided by 100.
11.5 Insignificant Changes. 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. Any adjustments which by reason of this Section
11.5 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 ten-thousandth of a Preferred
Share or the nearest one one-hundredth of a Common Share or other share or
security, as the case may be.
11.6 Shares Other Than Preferred Shares. If as a result of an adjustment
made pursuant to Section 11.1, 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 such 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 11.1,
11.2, 11.3, 11.5, 11.8, 11.9 and 11.13, and the provisions of Section 7, Section
9, Section 10, and Section 14 with respect to the Preferred Shares shall apply
on like terms to any such other shares.
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11.7 Rights Issued Prior to Adjustment. All Rights originally issued by
the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the number
of one one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8 Effect of Adjustments. Unless the Company shall have exercised its
election as provided in Section 11.9, upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
ten-thousandth of a Preferred Share) obtained by (a) multiplying (x) the number
of one one-hundredths of a Preferred Share covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (b) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
11.9 Adjustment in Number of Rights. The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of a
Preferred Share issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a 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-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11.9, the
Company may, 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, 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 may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
11.10 Right Certificates Unchanged. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-hundredths 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 per
share and the number of one one-hundredths of a Preferred Share which were
expressed in the initial Right Certificates issued hereunder.
11.11 Par Value Limitations. Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares or other shares of capital stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares or other
such shares at such adjusted Purchase Price.
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11.12 Deferred Issuance. 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 of that number of Preferred Shares and shares of other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the Preferred Shares and shares of other capital stock or other
securities, assets or cash of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
11.13 Reduction in Purchase Price. Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any of the Preferred Shares at
less than the current market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Shares shall not
be taxable to such shareholders.
11.14 Company Not to Diminish Benefits of Rights. The Company covenants
and agrees that after the Distribution Date it will not, except as permitted by
Section 23, Section 26, or Section 27, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
11.15 Adjustment of Rights Associated With Common Shares. Notwithstanding
anything contained in this Agreement to the contrary, in the event that the
Company shall at any time after the date hereof and prior to the Distribution
Date (i) declare or pay any dividend on the outstanding Common Shares payable in
Common Shares, (ii) effect a subdivision or consolidation of the outstanding
Common Shares (by reclassification or otherwise than by the payment of dividends
payable in Common Shares), or (iii) combine the outstanding Common Shares into a
greater or lesser number of Common Shares, then in any such case, the number of
Rights associated with each Common Share then outstanding, or issued or
delivered thereafter but prior to the Distribution Date or in accordance with
Section 22 shall be proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction, the numerator
of which shall be the 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 adjustments provided for in this Section 11.15 shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
SECTION 12. Certificate of Adjustments.
Whenever an adjustment is made as provided in Section 11 or Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares or 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 25. The Rights Agent shall be
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fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale of Assets.
13.1 Certain Transactions. In the event that, from and after the first
occurrence of a Trigger Event, directly or indirectly, (a) the Company shall
consolidate with, or merge with and into, any other Person and the Company shall
not be the continuing or surviving corporation, (b) any Person shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of the Company or any other Person or cash or any
other property, or (c) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or one or more wholly-owned Subsidiaries of the Company in one or more
transactions each of which complies with Section 11.14), then, and in each such
case, proper provision shall be made so that (i) each holder of a Right (other
than Rights which have become void pursuant to Section 11.1.2) shall thereafter
have the right to receive, upon the exercise thereof at a price per Right equal
to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12), in
accordance with the terms of this Agreement and in lieu of Preferred Shares or
Common Shares, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as such
term is defined in Section 13.2) not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall be equal to the result
obtained by (x) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Trigger Event (as subsequently
adjusted pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12) and (y)
dividing that product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11.4) on
the date of consummation of such consolidation, merger, sale or transfer;
provided that the price per Right so payable and the number of Common Shares of
such Principal Party so receivable upon exercise of a Right shall thereafter be
subject to further adjustment as appropriate in accordance with Section 11.6 to
reflect any events covered thereby occurring in respect of the Common Shares of
such Principal Party after the occurrence of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; provided that, upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13.1, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had such holder, at the time of such transaction, owned the Common
Shares of the Principal Party receivable upon the exercise of a Right pursuant
to this Section 13.1, and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property.
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The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
confirming that the requirements of this Section 13.1 and Section 13.2 shall
promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Agreement as the same shall have been assumed
by the Principal Party pursuant to this Section 13.1 and Section 13.2 and
providing that, as soon as practicable after executing such agreement pursuant
to this Section 13, the Principal Party, at its own expense, shall:
(1) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;
(2) use its best efforts, if the Common Shares of the Principal
Party shall be listed or admitted to trading on the NYSE or on another national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on the
NYSE or such securities exchange, or, if the Common Shares of the Principal
Party shall not be listed or admitted to trading on the NYSE or a national
securities exchange, to cause the Rights and the securities receivable upon
exercise of the Rights to be authorized for quotation on Nasdaq or on such other
system then in use;
(3) 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 (or any successor form) under the Exchange Act; and
(4) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Shares of the Principal Party subject to
purchase upon exercise of outstanding Rights.
In case the Principal Party has a provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, Common Shares or
common stock equivalents of such Principal Party at less than the then current
market price per share thereof (determined pursuant to Section 11.4) or
securities exercisable for, or convertible into, Common Shares or common stock
equivalents of such Principal Party at less than such then current market price
(other than to holders of Rights pursuant to this Section 13), or (ii) providing
for any special payment, taxes or similar provision in connection with the
issuance of the Common Shares of such Principal Party pursuant to the provisions
of Section 13, then, in such event, the Company hereby agrees with each holder
of Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
The Company covenants and agrees that it shall not, at any time
after the Trigger Event, enter into any transaction of the type described in
clauses (a) through (c) of this Section 13.1 if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any
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rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (ii) prior to, simultaneously with or
immediately after such consolidation, merger, sale, transfer or other
transaction, the stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13.2 shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (iii) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
provisions of this Section 13 shall similarly apply to successive transactions
of the type described in clauses (a) through (c) of this Section 13.1.
13.2 Principal Party. "Principal Party" shall mean:
(i) In the case of any transaction described in (a) or (b) of the
first sentence of Section 13.1: (i) the Person that is the issuer of the
securities into which the Common Shares are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the Common
Shares of which have the greatest aggregate market value of shares outstanding,
or (ii) if no securities are so issued, (x) the Person that is the other party
to the merger, if such Person survives said merger, or, if there is more than
one such Person, the Person the Common Shares of which have the greatest
aggregate market value of shares outstanding or (y) if the Person that is the
other party to the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives) or (z) the Person
resulting from the consolidation; and
(ii) In the case of any transaction described in (c) of the first
sentence in Section 13.1, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause (i)
or (ii) of this Section 13.2, if the Common Shares of such Person are not at
such time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person is a
direct or indirect Subsidiary of another Person the Common Shares of which are
and have been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding, or (3) if 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
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
13.3 Approved Acquisitions. Notwithstanding anything contained herein to
the contrary, upon the consummation of any merger or other acquisition
transaction of the type described in clause (a), (b) or (c) of Section 13.1
involving the Company pursuant to a merger or other acquisition agreement
between the Company and any Person (or one or more of such Person's Affiliates
or Associates) which agreement has been approved by the Board of Directors of
the Company prior to any Person becoming an Acquiring Person, this Agreement and
the rights of holders of Rights hereunder shall be terminated in accordance with
Section 7.1.
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SECTION 14. Fractional Rights and Fractional Shares.
14.1 Cash in Lieu of Fractional Rights. The Company shall not be required
to issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights (except prior to the Distribution Date in accordance with
Section 11.15). 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 14.1, 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 NYSE or, if the Rights are not listed or admitted to trading on
the NYSE, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the current market value of the Rights on such date shall
be the fair value of the Rights as determined in good faith by the Board of
Directors of the Company, or, if at the time of such determination there is an
Acquiring Person, by a nationally or regionally recognized investment banking
firm selected by the Board of Directors of the Company, which shall have the
duty to make such determination in a reasonable and objective manner, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
14.2 Cash in Lieu of Fractional Preferred Shares. The Company shall not be
required to issue fractions of Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share) upon exercise or
exchange of the Rights or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share). Interests in fractions of Preferred Shares
in integral multiples of one one-hundredth 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 all 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
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the same
fraction of the current per share market price of one Preferred Share (as
determined in accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
14.3 Cash in Lieu of Fractional Common Shares. The Company shall not be
required to issue fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares upon the exercise or exchange of Rights. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share (as determined in accordance
with Section 14.1) for the Trading Day immediately prior to the date of such
exercise or exchange.
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14.4 Waiver of Right to Receive Fractional Rights or Shares. The holder of
a Right by the acceptance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise or exchange of a
Right, except as permitted by this Section 14.
SECTION 15. Rights of Action.
All rights of action in respect of this Agreement, except the rights
of action given to the Rights Agent under Section 18, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce this
Agreement, and may institute and maintain any suit, action or proceeding against
the Company to enforce this Agreement, or otherwise enforce or act in respect of
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person (including, without
limitation, the Company) 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: (i) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares; (ii) as of and after the
Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a proper instrument
of transfer with all required certifications completed; and (iii) 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 Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary.
SECTION 17. Right Certificate Holder Not Deemed a Shareholder.
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 shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
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SECTION 18. Concerning the Rights Agent.
The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon 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 arising
therefrom, directly or indirectly.
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 the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
SECTION 19. Merger or Change of Name of Rights Agent.
Any corporation or limited liability company into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation or limited liability company resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation or limited liability company succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation or limited
liability company would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
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20.1 Legal Counsel. The Rights Agent may consult with legal counsel
selected by it (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.
20.2 Certificates as to Facts or Matters. Whenever in the performance of
its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
Chief Financial Officer, any Vice President, or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
20.4 Reliance on Agreement and Right Certificates. The Rights Agent shall
not be liable for or by reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates (except as to its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
20.5 No Responsibility as to Certain Matters. The Rights Agent shall not
be under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11.1.2) or any adjustment required under the provisions of Sections 3,
11, 13, 23, or 27, 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 actual notice of any such change or adjustment); 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 other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
20.6 Further Assurance by Company. 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.
20.7 Authorized Company Officers. 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 of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties under this Agreement, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for these instructions. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be
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taken or omitted by the Rights Agent with respect to its duties or obligations
under this Agreement and the date on and/or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
to the Company for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified therein (which date shall not be less than three Business Days after
the date any such officer actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking of any such action (or the effective date in the case of omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
20.8 Freedom to Trade in Company Securities. 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.
20.9 Reliance on Attorneys and Agents. 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, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, omission, default, neglect or misconduct,
provided that reasonable care was exercised in the selection and continued
employment thereof.
20.10 Incomplete Certificate. If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
contained in the form of assignment or the form of election to purchase set
forth on the reverse thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an Affiliate or Associate
thereof), the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
20.11 Rights Holders List. At any time and from time to time after the
Distribution Date, upon the request of the Company, the Rights Agent shall
promptly deliver to the Company a list, as of the most recent practicable date
(or as of such earlier date as may be specified by the Company), of the holders
of record of Rights.
SECTION 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Shares and/or
Preferred Shares, as applicable, by registered or certified mail. Following the
Distribution Date, the Company shall promptly notify the holders of the Right
Certificates by first-class mail of any such resignation. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares and/or Preferred Shares, as applicable,
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the resigning, removed, or incapacitated
Rights Agent shall remit to the Company, or to any successor Rights Agent
designated by the Company, all books, records, funds, certificates or other
documents or instruments of any kind then in its possession which were acquired
by such resigning, removed or incapacitated Rights Agent in connection with its
services as Rights Agent hereunder, and shall thereafter be discharged from all
duties and obligations hereunder. Following notice of such removal, resignation
or incapacity, the
-24-
Company shall appoint a successor to such Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or any state of the United States so long as such
corporation is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or examination by Federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $10 million. 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 Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and/or Preferred Shares, as applicable, and,
following the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the Expiration Date, the Company
shall, with respect to Common Shares so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, granted or awarded,
or upon exercise, conversion or exchange of securities hereinafter issued by the
Company, in each case existing prior to the Distribution Date, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate
would be issued and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
SECTION 23. Redemption.
23.1 Right to Redeem. The Board of Directors of the Company may, at its
option, at any time prior to a Shares Acquisition Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of $.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"), and
the Company may, at its option, pay the Redemption Price in Common Shares (based
on the "current per share market price," determined pursuant to Section 11.4, of
the Common Shares at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of Directors. The redemption of
the Rights by the Board
-25-
of Directors may be made effective at such time, on such basis and subject to
such conditions as the Board of Directors in its sole discretion may establish.
23.2 Redemption Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights (or at such later
time as the Board of Directors may establish for the effectiveness of such
redemption), and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held. The
Company shall promptly give public notice of such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. The Company shall promptly give, or cause the
Rights Agent to give, notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 27, and other
than in connection with the purchase, acquisition or redemption of Common Shares
prior to the Distribution Date.
SECTION 24. Notice of Certain Events.
In case the Company shall propose at any time after the Distribution
Date (a) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (other than a regular periodic cash dividend at a rate not in excess of
125% of the rate of the last regular periodic cash dividend theretofore paid or,
in case regular periodic cash dividends have not theretofore been paid, at a
rate not in excess of 50% of the average net income per share of the Company for
the four quarters ended immediately prior to the payment of such dividends, or a
stock dividend on, or a subdivision, combination or reclassification of the
Common Shares), or (b) to offer to the holders of 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, or (c)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person (other than pursuant to a merger or other
acquisition agreement of the type described in Section 1.3(ii)(A)(z)), or (e) to
effect the liquidation, dissolution or winding up of the Company, or (f) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to the Rights Agent and to each
holder of a Right Certificate, in accordance with Section 25, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, 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 and/or Common Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 10 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 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Shares and/or Common Shares, whichever shall be the
earlier.
-26-
In case any event set forth in Section 11.1.2 or Section 13 shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate,
in accordance with Section 25, a notice of the occurrence of such event, which
notice shall describe the event and the consequences of the event to holders of
Rights under Section 11.1.2 and Section 13, and (ii) all references in this
Section 24 to Preferred Shares shall be deemed thereafter to refer to Common
Shares and/or, if appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
SECTION 25. Notices.
Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Rentrak Corporation
0000 XX Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: President
with a copy to (such copy shall not constitute notice):
Xxxx Xxx Xxxxxx, Esq.
Xxxxxx Xxxx LLP
000 X.X. Xxxxx Xxx.
Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Subject to the provisions of Section 21 and Section 24, any notice
or demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: 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,
prior to the Distribution Date, to the holder of any certificate representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage-prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
-27-
SECTION 26. Supplements and Amendments.
For so long as the Rights are then redeemable, the Company may in
its sole and absolute discretion, and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of Rights or Common Shares. From and after
the time that the Rights are no longer redeemable, the Company may, and the
Rights Agent shall, if the Company so directs, from time to time supplement or
amend this Agreement without the approval of any holders of Rights (i) to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (ii) to
make any other changes or provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable, including but not
limited to extending the Final Expiration Date; provided, however, that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment may cause the Rights
again to become redeemable or cause this Agreement again to become amendable
other than in accordance with this sentence; provided further, that the right of
the Board of Directors to extend the Distribution Date shall not require any
amendment or supplement hereunder. 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 26, the Rights Agent
shall execute such supplement or amendment. Without limiting the foregoing, at
any time prior to such time as any Person becomes an Acquiring Person, the
Company and the Rights Agent may amend this Agreement to lower the thresholds
set forth in Sections 1.1 and 3.1 to not less than the greater of (i) any
percentage greater than the largest percentage of the outstanding Common Shares
then known by the Company to be beneficially owned by any Person (other than an
Exempt Person) and (ii) 10%.
SECTION 27. Exchange.
27.1 Exchange of Common Shares for Rights. The Board of Directors of the
Company may, at its option, at any time after the occurrence of a Trigger Event,
exchange Common Shares for all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11.1.2) by exchanging at an exchange ratio of that number
of Common Shares having an aggregate value equal to the Spread (with such value
being based on the current per share market price (as determined pursuant to
Section 11.4) on the date of the occurrence of a Trigger Event) per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "Exchange Consideration"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Acquiring Person shall have become the Beneficial Owner of
50% or more of the Common Shares then outstanding. From and after the occurrence
of an event specified in Section 13.1, any Rights that theretofore have not been
exchanged pursuant to this Section 27.1 shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
27.1. The exchange of the Rights by the Board of Directors may be made effective
at such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish.
27.2 Exchange Procedures. Immediately upon the action of the Board of
Directors of the Company ordering the exchange for any Rights pursuant to
Section 27.1 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 the Exchange Consideration. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry
-28-
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 shall state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than the Rights
that have become void pursuant to the provisions of Section 11.1.2) held by each
holder of Rights.
27.3 Insufficient Shares. The Company may at its option substitute, and,
in the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit an exchange of Rights for
Common Shares as contemplated in accordance with this Section 27, the Company
shall substitute to the extent of such insufficiency, for each Common Share that
would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof (or equivalent preferred stock, as such term is
defined in Section 11.2) such that the current per share market price
(determined pursuant to Section 11.4) of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal to the current
per share market price of one Common Share (determined pursuant to Section 11.4)
as of the date of such exchange.
SECTION 28. Determination and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to 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 amend this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights, as such, and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
SECTION 29. Miscellaneous Provisions
29.1 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.
29.2 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
29.3 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.
29.4 Governing Law. This Agreement and each Right Certificate issued
hereunder shall be
-29-
deemed to be a contract made under the laws of the State of Oregon and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
29.5 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.
29.6 Descriptive Headings. Descriptive headings of the several sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
RENTRAK CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
---------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer
U.S. STOCK TRANSFER CORPORATION
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: Vice President
-30-
EXHIBIT A
FORM OF
AMENDMENT TO ARTICLES OF INCORPORATION
of
RENTRAK CORPORATION
DESIGNATING TERMS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Rentrak Corporation, a corporation organized and existing under the
Oregon Business Corporation Act (hereinafter called the "Corporation"), hereby
amends its Articles of Incorporation to designate and adopt, in accordance with
the provisions of its Articles of Incorporation, terms for a series of the
Corporation's Preferred Stock, par value $.001 per share (the "Preferred
Stock"), with a number of shares, and preferences, limitations and relative
rights as follows:
Section 1. Designation and Amount. The shares of this series of
Preferred Stock shall be designated as "Series A Junior Participating Preferred
Stock" (the "Series A Preferred Stock") and the number of shares constituting
the Series A Preferred Stock shall be 300,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
2.1 Subject to the rights of the holders of any shares of any class
or series of stock of the Corporation ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock, in preference to the holders of Common Stock, par value $.001
per share (the "Common Stock"), of the Corporation, and of any other stock
ranking junior to the Series A Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of January, April, July, and October in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by
-A-1-
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
2.2 The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2.1 immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
2.3 Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
3.1 Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
3.2 Except as otherwise provided herein, in any other Amendment to
the Articles of Incorporation creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
-A-2-
3.3 Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
4.1 Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(a) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(b) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(c) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (both as to dividends and
upon dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(d) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on
a parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
4.2 The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section 4.1,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Amendment thereto creating a series
of Preferred Stock or any similar stock or as otherwise required by law.
-A-3-
Section 6. Liquidation, Dissolution or Winding Up.
6.1 Upon any liquidation, dissolution or winding up of the
Corporation, voluntary or otherwise, no distribution shall be made (1) to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount per share (the "Series A Liquidation Preference") equal to
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding immediately prior to such
event.
6.2 In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other classes and series of stock of the
Corporation, if any, that rank on a parity with the Series A Preferred Stock in
respect thereof, then the assets available for such distribution shall be
distributed ratably to the holders of the Series A Preferred Stock and the
holders of such parity shares in proportion to their respective liquidation
preferences.
6.3 Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
-A-4-
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable by the Company.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up, junior to all series of any other class
of the Corporation's Preferred Stock, except to the extent that any such other
series specifically provides that it shall rank on a parity with or junior to
the Series A Preferred Stock.
Section 10. Amendment. At any time any shares of Series A Preferred
Stock are outstanding, the Articles of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
separately as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
-A-5-
EXHIBIT B
[Form of Right Certificate]
Certificate No. R-
Rights
NOT EXERCISABLE AFTER MAY 18, 2015, OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR ACQUIRED PURSUANT
TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION 1.3(ii)(A)(z) OF THE AGREEMENT.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT, AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN
SECTION 11.1.2 OF THE AGREEMENT), RIGHTS BENEFICIALLY OWNED BY OR TRANSFERRED TO
AN ACQUIRING PERSON (AS DEFINED IN THE AGREEMENT), OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
RENTRAK 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 May 18, 2005, as the same may be amended from
time to time (the "Agreement"), between Rentrak Corporation, an Oregon
corporation (the "Company"), and U.S. Stock Transfer Corporation as Rights Agent
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date and prior to 5:00 P.M. (Oregon time) on May 18, 2015, at the
offices of the Rights Agent, or its successors as Rights Agent, designated for
such purpose, one one-hundredth of a fully paid, nonassessable share of Series A
Junior Participating Preferred Stock, par value $.001 per share (the "Preferred
Shares") of the Company, at a purchase price of $50.00 per one one-hundredth of
a Preferred Share, subject to adjustment (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and certification duly executed. The number of Rights evidenced by
this Right Certificate (and the number of one one-hundredths of a Preferred
Share which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of May 18,
2005, based on the Preferred Shares as constituted at such date. As provided in
the Agreement, the Purchase Price and the number of Preferred Shares which may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
Capitalized terms used in this Right Certificate without definition
shall have the meanings ascribed to them in the Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Agreement are on file at the principal offices of the Company and the Rights
Agent.
-B-1-
This Right Certificate, with or without other Right Certificates,
upon surrender at the offices of the Rights Agent designated for such purpose,
may be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share 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 Agreement, the Board of Directors
may, at its option, (i) redeem the Rights evidenced by this Right Certificate at
a redemption price of $.001 per Right or (ii) exchange Common Shares for the
Rights evidenced by this Certificate, in whole or in part.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions of Preferred Shares
which are integral multiples of one one-hundredth of a Preferred Share, which
may, at the election of the Company, be evidenced by depository receipts), but
in lieu thereof a cash payment will be made, as provided in the Agreement.
No holder of this Right Certificate, as such, 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
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Agreement.
If any term, provision, covenant or restriction of the 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 the Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Right Certificate shall not be valid or binding for any purpose
until it shall have been countersigned by the Rights Agent.
-B-2-
WITNESS facsimile signatures of the proper offices of the Company.
Dated as of ______________________, 20__.
RENTRAK CORPORATION
By: ___________________________
Name: ___________________________
Title: ___________________________
Countersigned:
U.S. STOCK TRANSFER CORPORATION
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)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _______________________________
Signature: ___________________________
Signature Guaranteed: ________________
Signatures must be guaranteed by an "eligible guarantor institution"
as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; 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, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated:
----------------------
------------------------------------
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To: Rentrak Corporation
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights (or such other
securities or property of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of and delivered to:
Please insert social security or other identifying number:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
--------------------------------------------------------------------------------
(Please print name and address)
Dated: ______________________________
Signature: __________________________
Signature Guaranteed: _______________
Signatures must be guaranteed by an "eligible guarantor institution"
as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
The undersigned hereby certifies that:
(1) the Rights evidenced by this Right Certificate are not
beneficially owned by and are not being assigned to an Acquiring Person or an
Affiliate or an Associate thereof; 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, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated:
----------------------
------------------------------------
Signature
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase 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 Form of Election to Purchase is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate hereof and such Assignment
or Election to Purchase will not be honored.
EXHIBIT C
As described in the Rights Agreement, Rights which are held by or
have been held by an Acquiring Person or Associates or Affiliates thereof (as
defined in the Rights Agreement) and certain transferees thereof will become
null and void and will no longer be transferable.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On May 6, 2005, the Board of Directors of Rentrak Corporation (the
"Company" or "Rentrak") declared a dividend of one preferred share purchase
right (a "Right") for each share of common stock, $.001 par value (the "Common
Shares"), of the Company outstanding at the close of business on May 18, 2005
(the "Record Date"). As long as the Rights are attached to the Common Shares,
the Company will issue one Right (subject to adjustment) with each new Common
Share so that all such shares will have attached Rights. When exercisable, each
Right will entitle the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock (the
"Preferred Shares") at a price of $50.00 per one one-hundredth of a Preferred
Share, subject to adjustment (the "Purchase Price"). The terms and conditions
applicable to Rights are set forth in a Rights Agreement, dated as of May 18,
2005, as the same may be amended from time to time (the "Agreement"), between
the Company and U.S. Stock Transfer Corporation as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) the 10th day after a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the Common Shares (an "Acquiring Person") or (ii) 10 business days (or such
later date as the Board of Directors may determine prior to such time as a
person or group becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the Common Shares (the earlier of (i) and (ii) being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Share certificates outstanding as of the Record Date, by such
Common Share certificate together with a copy of this Summary of Rights.
The Agreement provides that until the Distribution Date (or earlier
redemption, exchange, termination, or expiration of the Rights), the Rights will
be transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates will contain a notation incorporating the Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange, termination or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares, with or without such notation or a copy of this Summary of
Rights, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on May 18, 2015, subject to the Company's right to extend
such date (the "Final Expiration Date"), unless earlier redeemed or exchanged by
the Company or terminated.
Each Preferred Share purchasable upon exercise of the Rights will be
entitled, when, as and if declared, to a minimum preferential quarterly dividend
payment of $1.00 per share but will be entitled to an aggregate dividend of 100
times the dividend, if any, declared per Common Share. In the
-C-1-
event of liquidation, dissolution or winding up of the Company, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share (plus any accrued but unpaid dividends) but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preferred Share will have 100 votes and will vote together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. Preferred Shares will
not be redeemable. These rights are protected by customary antidilution
provisions. Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of one one-hundredth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash, securities or assets (excluding regular periodic cash
dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or dividends payable in
Preferred Shares (which dividends will be subject to the adjustment described in
clause (i) above)) or of subscription rights or warrants (other than those
referred to above).
If a Person becomes an Acquiring Person or if the Company were the
surviving corporation in a merger with an Acquiring Person or any affiliate or
associate of an Acquiring Person and the Common Shares were not changed or
exchanged, each holder of a Right, other than Rights that are or were acquired
or beneficially owned by the Acquiring Person (which Rights will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the then current Purchase Price
of the Right. If, after a person has become an Acquiring Person, the Company
were acquired in a merger or other business combination transaction or more than
50% of its assets or earning power were sold, proper provision shall be made so
that each holder of a Right shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price of the Right, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the then current Purchase
Price of the Right.
At any time after a Person becomes an Acquiring Person and prior to
the earlier of one of the events described in the last sentence of the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors may cause the Company to
exchange the Rights (other than Rights owned by an Acquiring Person, which will
have become void), in whole or in part, for Common Shares having an aggregate
value equal to the spread (the excess of the value of Common Shares issuable
upon exercise of a Right over the exercise price) for each Right (other than
Rights held by such Acquiring Person and its affiliates and associates).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares or Common Shares will be issued (other
than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depository receipts), and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred Shares or Common Shares
on the last trading date prior to the date of exercise.
-C-2-
The Rights may be redeemed in whole, but not in part, at a price of
$.001 per Right (the "Redemption Price") by the Board of Directors at any time
until a public announcement that a person has become an Acquiring Person. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company beyond those as an existing
shareholder, including, without limitation, the right to vote, to receive
dividends, or to receive liquidation proceeds.
Any of the provisions of the Agreement may be amended by the Board
of Directors of the Company for so long as the Rights are then redeemable, and
after the Rights are no longer redeemable, the Company may amend or supplement
the Agreement in any manner that does not adversely affect the interests of the
holders of the Rights (other than an Acquiring Person or an affiliate or
associate of an Acquiring Person). The Company may, at any time prior to such
time as any person becomes an Acquiring Person, amend the Agreement to lower the
thresholds described above to no less than the greater of (i) any percentage
greater than the largest percentage of the outstanding Common Shares then known
by the Company to be beneficially owned by any person or group of affiliated or
associated persons (other than an Exempt Person) and (ii) 10%.
A copy of the Agreement has been filed with the Securities and
Exchange Commission as Exhibit 4.1 to the Company's Current Report on Form 8-K
filed May 18, 2005. A copy of the Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Agreement, which is
incorporated herein by reference.
-C-3-
