ALARMGUARD HOLDINGS, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Rights Agreement
Dated as of April 10, 1998
RIGHTS AGREEMENT
Rights Agreement, dated as of April 10, 1998, between
ALARMGUARD HOLDINGS, INC., a Delaware corporation (the
"Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New
York corporation, as Rights Agent (the "Rights Agent").
RECITALS
WHEREAS, on April 6, 1998, 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 April 24, 1998
(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), each Right initially representing the right to
purchase one one-hundredth (subject to adjustment) of a share of
Series C Junior Participating Preferred Stock (the "Preferred
Shares") of the Company having the rights, powers and preferences
set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions
hereinafter set forth provided, however, that Rights may be
issued with respect to Common Shares that shall become
outstanding after the Distribution Date and prior to the
Expiration Date in accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 20% or more of the Common Shares of the
Company then outstanding but shall not include (i) an Exempt
Person (as such term is hereinafter defined) or (ii) any Existing
Holder (as defined below), unless and until such time as such
Existing Holder shall become the Beneficial Owner of 25% or more
of the Common Shares of the Company then outstanding. "Existing
Holder" shall mean Canaan Venture Limited Partnership, Canaan
Venture Offshore Limited Partnership C.V. and Canaan Equity L.P.,
together with all of their Affiliates and Associates.
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 20% (or, in the case of an
Existing Holder, 25%) or more of the Common Shares of the Company
then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 20% (or, in the case of an
Existing Holder, 25%) 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,
become the Beneficial Owner of one or more additional Common
Shares of the Company, 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
pursuant to the foregoing provisions of this Section 1.1, has
become such inadvertently, and without any intention of changing
or influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of Common Shares so
that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this Section 1.1,
then such Person shall not be deemed to be or have become an
"Acquiring Person" at any time for any purposes of this
Agreement. For all purposes of this Agreement, any calculation
of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof.
1.2 "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations, under 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 (other than
the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, (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 have the right to acquire, pursuant to any
merger or other acquisition agreement between the
Company and such Person (or one or more of his
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) 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(ii)(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 deemed,
solely by reason of such Person's status or authority as
such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" 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" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
1.5 "close of business" on any given date shall mean
5:00 p.m., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 p.m., New
York time, on the next succeeding Business Day.
1.6 "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $.0001
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 "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a
member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or an employee,
director, representative, nominee or designee of any Acquiring
Person or of any such Affiliate or Associate, and was a member of
the Board prior to the time that any Person becomes an Acquiring
Person or (ii) any Person (during such period in which such
Person is a member of the Board) who, after the time that any
Person becomes an Acquiring Person, becomes a member of the Board
and who is not an Acquiring Person, or an Affiliate of Associate
of an Acquiring Person, or an employee, director, representative,
nominee or designee of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election
or election to the Board is recommended or approved by a majority
of the Continuing Directors.
1.8 "Exempt Person" shall mean the Company, any
Subsidiary (as such term is hereinafter defined) 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, in its capacity as an agent or trustee for any such plan.
1.9 "Person" shall mean any individual, partnership,
joint venture, limited liability company, firm, corporation,
unallocated association, trust or other entity, and shall include
any successor (by merger or otherwise) of such entity.
1.10 "Shares Acquisition Date" shall mean 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 or
such earlier date as a majority of the Board of Directors shall
become aware of the existence of an Acquiring Person.
1.11 "Subsidiary" of any Person shall mean 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.
1.12 A "Trigger Event" shall be deemed to have occurred
upon any Person becoming an Acquiring Person.
1.13 The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4.1
Current Value 11.1.3
Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Existing Holder 1.1
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4.1
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 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 (i) the tenth day after the Shares Acquisition Date or
(ii) the tenth business day after the date of the commencement
of, or first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding shares of capital stock of the
Company for or pursuant to the terms of any such plan, in its
capacity as an agent or trustee for any such plan) to commence, a
tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares
aggregating 20% or more of the then outstanding Common Shares of
the Company (the earlier of (i) and (ii) 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
specified as a result of an event described in clause (ii) (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 event described in clause
(ii) beyond the date set forth in such clause (ii). 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, 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. On the Record Date or as soon
as practicable thereafter, the Company will send or cause to be
sent a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of Common Shares as of the close of business
on the Record Date at the address of such holder shown on the
records of the Company. 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, issuance out of
treasury 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 impressed,
printed, stamped, written or otherwise affixed onto them the
following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in an Agreement
between Alarmguard Holdings, Inc. (the "Company") and
American Stock Transfer & Trust Company, as Rights
Agent, dated as of April 10, 1998, as the same may be
amended from time to time (the "Agreement"), the terms
of which are hereby incorporated herein by reference
and a copy of which is on file at the principal
executive offices of the Company. Under certain
circumstances, as set forth in the Agreement, such
Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a
copy of the Agreement without charge after receipt of a
written request therefor. As described in the
Agreement, Rights which are owned by, transferred to or
have been owned by Acquiring Persons or Associates or
Affiliates thereof (as defined in the Agreement) shall
become null and void and will no longer be
transferable.
With respect to such 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 Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Notwithstanding this Section 3.3, the omission of 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 herein.
Section 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board of Directors, the 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, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Section
7.5, 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 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 of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
7.1 Exercise of Rights. Subject to 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 (i)
the close of business on April 6, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date"), (iii) the closing
of any merger or other acquisition transaction involving the
Company pursuant to an agreement of the type described in
Sections 1.3(ii)(A)(z) and 13.3, at which time the Rights are
deemed terminated, or (iv) 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 shall be initially $65.00, shall be subject to adjustment
from time to time as provided in Sections 11, 13 and 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 shares to be
purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in
accordance with Section 9, 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 (i)(A) 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 (B) 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 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, (ii) 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, (iii) 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 (iv) 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.
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 or out
of its shares held in its treasury) 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 traded in the over-the-
counter market and quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq")
(including the National Market or Small Cap Market), 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 Nasdaq 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 90 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.
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
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 (A) declare and pay a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares or (D) issue any shares
of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11.1, 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; provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both
Section 11.1.1 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; Triggering Events.
Subject to Sections 23.1 and 27 of this Agreement, in the event
(A) that any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, shall merge
into the Company or otherwise combine with the Company and
the Company shall be the continuing or surviving corporation
of such merger or combination and the Common Shares of the
Company shall remain outstanding and not be changed into or
exchanged for stock or other securities of any other Person
or the Company or cash or any other property, or
(B) 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 (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, one of the events listed above in this Section
11.1.2 (the "Adjustment Shares"); provided, however, that if the
transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13, then
only the provisions of Section 13 shall apply and no adjustment
shall be made pursuant to this Section 11.1.2; provided, further,
that nothing contained in this Section 11.1.2 shall limit or
otherwise diminish the power of the Board of Directors to
postpone the Distribution Date pursuant to Section 3.1; provided,
further, 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 either of the events listed
above in this Section 11.1.2, 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.
The Company shall not enter into any transaction of the type
described in this Section 11.1.2 if at the time of such
transaction there are any rights, warrants, instruments or securi
ties outstanding or any arrangements which, as a result of the
consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by
the Rights. 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.
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 one or more of the events listed in Section 11.1.2
above there shall not be sufficient Common Shares authorized but
unissued, or held by the Company as treasury shares, 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: (A)
determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value"), over
(2) the Purchase Price (such excess, the "Spread") and (B) 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, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities
of the Company (including, without limitation, shares, or
fractions of shares, of preferred stock which, by virtue of
having dividend, voting and liquidation rights substantially
comparable to those of the Common Shares, 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
or fractions of shares of preferred stock constituting a "common
stock equivalent")), (4) debt securities of the Company, (5)
other assets or (6) 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 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 (B) above within thirty (30) days following the first
occurrence of one of the events listed in Section 11.1.2 above,
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 thirty (30) day period set
forth above may be extended and re-extended to the extent
necessary, but not more than ninety (90) days following the first
occurrence of one of the events listed in Section 11.1.2 above,
in order that the Company may seek stockholder 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 need 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 first occurrence of one of the events
listed in Section 11.1.2 above 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); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith
by the Board of Directors 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. Preferred Shares and shares of equivalent preferred
stock owned by or held for the account of the Company or any
Subsidiary of the Company 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(A))) 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) 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); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
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 thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that in the event that the current
per share market price of the Security is determined during 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 thirty (30)
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
"current per share market price" shall be appropriately adjusted
to reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security
is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use,
or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors 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 as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day. If the
Security is not publicly held or not so listed or traded,
"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 majority of the Continuing Directors then
in office, or if there are no Continuing Directors, by a
nationally 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 is publicly held or so listed or
traded, "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 majority of
the Continuing Directors then in office, or if there are no
Continuing Directors, by a nationally 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 such 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-hundred thousandth of a Preferred Share or the
nearest 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 through 11.3,
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Shares shall apply on like terms to
any such other shares.
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-hundred thousandth of a
Preferred Share) obtained by (i) 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 (ii) 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 ten (10) days
later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11.9, 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.
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
issuing to the holder of any Right exercised after such record
date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
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 stockholders.
11.14 Company Not to Diminish Benefits of Rights. The
Company covenants and agrees that after the earlier of the Shares
Acquisition Date or 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, 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 Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 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 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 or Transfer
of Assets or Earning Power.
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, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as
provided in Section 11.1.2 and as otherwise provided herein)
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
hereinafter defined) 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 purchasable shall thereafter be adjusted
in accordance with Section 11.6 by reason of such subsequent
events covered thereby occurring in respect 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. The Company shall not enter
into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The 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 will:
(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 New
York Stock Exchange 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 New York Stock Exchange or such securities exchange, or,
if the Common Shares of the Principal Party shall not be listed
or admitted to trading on the New York Stock Exchange 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 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, 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 provision 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 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 mergers or consolidations or sales or other
transfers.
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 if the Common Shares of such Person is not at such time or
has 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 is and has 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 is and has 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 ventures,
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, in the event of any merger or
other acquisition transaction 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.
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 New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker 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 fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company shall be
used.
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).
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.
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:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
the Common Shares;
(b) 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
(c) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
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
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 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.
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 Consolidation 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:
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, the Chief
Financial Officer, any Vice President, the Treasurer, the
Secretary or any Assistant Treasurer or Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
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, the Treasurer, the Secretary or any Assistant
Treasurer or Assistant 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 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 Rights 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 thirty (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 thirty (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 Company
shall appoint a successor to such Rights Agent. If the Company
shall fail to make such appointment within a period of thirty
(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 of the State of
New York or the State of California (or any other state of the
United States so long as such corporation is authorized to do
business as a banking institution in the State of New York or
California) in good standing, having an office in the State of
New York or the State of California, which is authorized under
such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by Federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $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 successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares and/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 (a) shall, with respect to Common
Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon exercise, conversion
or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, 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, (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 and (iii) at the time of a
determination by the Board of Directors to cause the Company to
issue a Right Certificate under clause (b) above, there must be
Continuing Directors then in office and any such determination
shall require the approval of at least a majority of such
Continuing Directors.
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 Trigger Event,
redeem all but not less than all of the then outstanding Rights
at a redemption price of $0.01 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 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 earlier of the Shares
Acquisition Date and 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 ten (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 ten
(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.
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:
Alarmguard Holdings, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Secretary
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:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Shareholder Services Division
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.
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, (ii) to shorten or lengthen any
time period hereunder (which shortening or lengthening, after the
time a Person becomes an Acquiring Person, shall be effective
only if there are Continuing Directors and shall require the
approval of at least a majority of such Continuing Directors) or
(iii) 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 the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan) and
(ii) 10%. Notwithstanding anything herein to the contrary, any
supplement or amendment to this Agreement after the time that a
Person becomes an Acquiring Person shall require the affirmative
vote of a majority of the Continuing Directors.
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 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, (i) 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 and (ii) the Board
shall not be empowered to effect an exchange for more than that
number of Rights for which there are sufficient Common Shares
authorized but unissued, or held by the Company as treasury
shares, to permit the exchange for Rights. 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 exerciseable 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 that number of Common Shares equal to
the number of such Rights held by such holder multiplied by 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 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 which 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 Shares 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. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. 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).
Section 30. Determinations 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 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Heading. 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.
ALARMGUARD HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Vice President
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
of
ALARMGUARD HOLDINGS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
_____________________________
ALARMGUARD HOLDINGS, INC., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), hereby certifies
that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on
April 6, 1998.
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation (hereinafter
called the "Board of Directors" or the "Board") in accordance
with the provisions of the Certificate of Incorporation of this
Corporation, the Board of Directors hereby creates a series of
Preferred Stock, par value $.0001 per share (the "Preferred
Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, powers and
preferences, and qualifications, limitations and restrictions
thereof as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series C Junior Participating
Preferred Stock" (the "Series C Preferred Stock") and the number
of shares constituting the Series C Preferred Stock shall be
250,000. 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 C 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 C Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any class or series of stock of
this Corporation ranking prior and superior to the Series C
Preferred Stock with respect to dividends, the holders of
shares of Series C Preferred Stock, in preference to the
holders of Common Stock, par value $.0001 per share (the
"Common Stock"), of the Corporation, and of any other stock
ranking junior to the Series C 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
March, June, September and December 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 C 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 C
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 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 C 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.
(B) The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as provided in
paragraph (A) of this Section 2 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 C Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series C 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 C 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 C 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 C 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
C Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series C Preferred
Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the stockholders 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 C 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.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares
of Series C 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 stockholders of
the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series C 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.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C 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 C Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) 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 C Preferred
Stock;
(ii) 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 C Preferred
Stock, except dividends paid ratably on the Series C
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;
(iii) 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 C 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 (either as to
dividends or upon dissolution, liquidation or winding
up) to the Series C Preferred Stock; or
(iv) redeem or purchase or otherwise acquire
for consideration any shares of Series C Preferred
Stock, or any shares of stock ranking on a parity with
the Series C 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.
(B) 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 paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series C
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 Certificate of
Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A)
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 C Preferred Stock unless, prior thereto, the holders
of shares of Series C Preferred Stock shall have received an
amount per share (the "Series C 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 C 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 C Preferred Stock,
except distributions made ratably on the Series C 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 C
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.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series C 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 C Preferred Stock in
respect thereof, then the assets available for such distribution
shall be distributed ratably to the holders of the Series C
Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) 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 C 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 C 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.
Section 8. No Redemption. The shares of Series C Preferred
Stock shall not be redeemable by the Company.
Section 9. Rank. The Series C 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 C Preferred Stock.
Section 10. Amendment. At any time any shares of Series C
Preferred Stock are outstanding, the Certificate 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 C 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 C Preferred Stock,
voting separately as a single class.
Section 11. Fractional Shares. Series C 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 C Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chairman of the
Board this ___ day of _______, 1998.
______________________________
Chairman of the
Board
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER APRIL 6, 2008 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 $.01 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
ALARMGUARD HOLDINGS, INC.
This certifies that , or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April 10, 1998, as the same may be amended
from time to time (the "Agreement"), between ALARMGUARD HOLDINGS,
INC., a Delaware corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York 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. New York City
time on April 6, 2008, 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 C Junior
Participating Preferred Stock, par value $.0001 per share (the
"Preferred Shares") of the Company, at a purchase price of $65.00
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 April 6, 1998 based on the
Preferred Shares as constituted at such date. Capitalized terms
used in this Right Certificate without definition shall have the
meanings ascribed to them in the Agreement. 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.
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.
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 $.01 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 stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the 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.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of ____________,
1998.
Attest: ALARMGUARD HOLDINGS, INC.
By ______________________ By ___________________________
Title: Title:
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By:
Authorized Signature
[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: ALARMGUARD HOLDINGS, INC.
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:
____________________________________________________________
(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 shall become null and void and will no longer
be transferable.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On April 6, 1998 the Board of Directors of Alarmguard
Holdings, Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each share of
common stock, $.0001 par value (the "Common Shares"), of the
Company outstanding at the close of business on April 24, 1998
(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 C Junior Participating
Preferred Stock (the "Preferred Shares") at a price of $65.00 per
one one-hundredth of a Preferred Share, subject to adjustment
(the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement, dated as of April 10, 1998,
as the same may be amended from time to time (the "Agreement"),
between the Company and American Stock Transfer & Trust Company,
as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following
a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 20% (or, in the case of an
Existing Holder (as defined in the Agreement), 25%)) or more of
the Common Shares (an "Acquiring Person") or (ii) ten (10)
business days (or such later date as may be determined by action
of the Board of Directors prior to such time as any person or
group of affiliated persons 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
20% 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 issued after the close of business on the Record
Date upon transfer or new issuance of the Common Shares 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 April 6, 2008, 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 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
Share's 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).
In the event that 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. In
the event that, 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 that number of Common
Shares having an aggregate value equal to the Spread (the excess
of the value of the Common Shares issuable upon exercise of a
Right after a Person becomes an Acquiring Person over the
Purchase Price) per Right (subject to adjustment).
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.
The Rights may be redeemed in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") by the Board of
Directors at any time prior to the time that an Acquiring Person
has become such. 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 stockholder of the Company beyond those
as an existing stockholder, including, without limitation, the
right to vote or to receive dividends.
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.
A copy of the Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form
8-K. 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.
