Exhibit 4.1
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ADVANCED MARKETING SERVICES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
RIGHTS AGREEMENT
Dated as of August 9, 2005
Section 1. Certain Definitions...........................................1
Section 2. Appointment of Rights Agent...................................5
Section 3. Issuance of Right Certificates................................5
Section 4. Form of Right Certificates....................................6
Section 5. Countersignature and Registration.............................7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates..................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights........................................................9
Section 8. Cancellation and Destruction of Right Certificates...........11
Section 9. Reservation and Availability of Shares; Registration.........11
Section 10. Record Date..................................................12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights.......................................................12
Section 12. Certification of Adjusted Purchase Price or Number of
Shares.......................................................19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................19
Section 14. Fractional Rights and Fractional Shares......................22
Section 15. Rights of Action.............................................23
Section 16. Agreement of Right Holders...................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder............23
Section 18. Concerning the Rights Agent..................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent....24
Section 20. Duties of Rights Agent.......................................25
Section 21. Change of Rights Agent.......................................27
Section 22. Issuance of New Right Certificates...........................28
Section 23. Redemption...................................................28
Section 24. Notice of Proposed Actions...................................28
Section 25. Notices......................................................29
Section 26. Supplements and Amendments...................................29
Section 27. Exchange.....................................................30
Section 28. Successors...................................................31
Section 29. Determination and Actions Taken by the Board of Directors....31
Section 30. Benefits of this Agreement...................................31
Section 31. Governing Law................................................31
Section 32. Counterparts.................................................32
Section 33. Section Headings.............................................32
Section 34. Severability.................................................32
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RIGHTS AGREEMENT
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AGREEMENT, dated as of August 9, 2005, between Advanced Marketing Services,
Inc., a Delaware corporation (the "Company"), and American Stock Transfer &
Trust Company as Rights Agent.
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has authorized and declared
the distribution of one right for (i) each share of Common Stock of the Company
("Common Stock") outstanding at the Close of Business (as hereinafter defined)
on August 22, 2005 (the "Rights Record Date"), each right representing the right
to purchase one Unit consisting, initially, of one one-tenth share of Common
Stock, and (ii) each additional share of Common Stock which shall become
outstanding between the Rights Record Date and the earliest of the Distribution
Date, the Expiration Date (as such terms are hereinafter defined) and the date,
if any, on which such rights are redeemed, all upon the terms and subject to the
conditions hereinafter set forth (each such right being hereinafter referred to
as a "Right");
NOW, THEREFORE, the parties agree as follows:
Section 1. Certain Definitions.
(a) For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" shall mean any Person other than an Exempt Person
who or which, alone or together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner (within the meaning of Section 1(b))
of a Substantial Block of Voting Stock; provided that no person shall
become an Acquiring Person solely as a result of a reduction in the number
of shares of Voting Stock outstanding, unless and until such Person shall
thereafter become the Beneficial Owner of additional shares constituting 1%
or more of the general voting power of the Company. Notwithstanding the
foregoing, no Person who, alone or together with all Affiliates and
Associates of such Person, was, at the time of the public announcement by
the Company on August 9, 2005 of the declaration by the Board of Directors
of the distribution of the Rights, the Beneficial Owner of 15% or more of
the Common Stock of the Company then outstanding shall be deemed to have
become an Acquiring Person unless and until such time as such Person or any
Affiliate or Associate of such Person thereafter becomes the Beneficial
Owner of any additional Common Stock of the Company (other than as a result
of a stock dividend, stock split or similar transaction effected by the
Company in which all holders of Common Stock of the Company are treated
equally). If the Directors determine in good faith that a Person who would
otherwise be an Acquiring Person has become such inadvertently, and such
Person divests as promptly as practicable a sufficient number of shares so
that such Person would no longer be an Acquiring Person as herein defined,
then such Person shall not be deemed to be an Acquiring Person unless and
until such Person shall become the Beneficial Owner of additional shares
constituting 1% or more of the general voting power of the Company.
"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 as of the date hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banking institutions in the States of New York or New Jersey are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., Los
Angeles time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Los Angeles time, on the next
succeeding Business Day.
"Common Stock" shall have the meaning assigned to it in the preamble;
and "common stock" when used with reference to Persons other than the
Company shall mean: (i) in the case of Persons organized in corporate form,
the capital stock or equity security with the greatest voting power of such
Person or, if such Person is a Subsidiary of another Person, of the Person
or Persons which ultimately control such first-mentioned Person; and (ii)
in the case of Persons not organized in corporate form, the units of
beneficial interest which (A) represent the right to participate generally
in the profits and losses of such Person (including without limitation any
flow-through tax benefits resulting from an ownership interest in such
Person) and (B) are entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall have the power to
remove the general partner or partners.
"Distribution Date" shall have the meaning assigned to it in Section
3(a).
"Equivalent Stock" shall have the meaning assigned to it in Section
7(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exempt Person" shall mean (i) the Company, any Subsidiary of the
Company and any employee benefit plan or employee stock plan of the Company
or of any Subsidiary of the Company, or any trust or other entity
organized, established or holding shares of Common Stock by, for or
pursuant to, the terms of any such plan; (ii) any person designated by the
Board of Directors as an Exempt Person, unless and until such Person shall
thereafter become the Beneficial Owner of additional shares constituting 1%
or more of the general voting power of the Company otherwise than in a
transaction or series of transactions approved by the Board of Directors;
or (iii) any Person who or which acquires voting stock in connection with a
transaction or series of transactions approved prior to such transaction or
transactions by the Board of Directors, unless and until such person shall
thereafter become the Beneficial Owner of additional shares constituting 1%
or more of the general voting power of the Company otherwise than in a
transaction or transactions so approved.
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"Expiration Date" shall have the meaning assigned to it in Section
7(a).
"Offer Date" shall have the meaning assigned to it in Section 3(a).
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company, trust or other entity and shall include any
successor by merger (or otherwise) of any of the foregoing.
"Principal Party" shall have the meaning assigned to it in Section
13(b).
"Purchase Price" shall mean the price payable for one Unit upon
exercise of a Right.
"Qualified Offer" shall mean a tender or exchange offer for all
outstanding Common Stock at a price and on terms determined to be adequate
and otherwise in the best interests of the Company and its shareholders
(other than the Person or an Affiliate or Associate thereof on whose behalf
the offer is made) by at least a majority of the Directors who are not
representatives of or affiliated with the Person making such offer or any
Affiliate or Associate of such Person.
"Redemption Price" shall have the meaning assigned to it in Section
23(a).
"Right" shall have the meaning assigned to it in the preamble.
"Rights Record Date" shall have the meaning assigned to it in the
preamble.
"Stock Acquisition Date" shall mean the date of the first public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
"Subject Shares" shall mean the class or series of shares then
issuable on exercise of the Rights.
"Subsidiary" of any Person shall mean a corporation or other entity of
which a majority of the securities or other ownership interests having
ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person or any Affiliate of such
Person.
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"Substantial Block" shall mean a number of shares of Voting Stock
having in the aggregate 15% or more of the general voting power.
"Trading Day" shall have the meaning assigned to it in Section 11(d).
"Unit" shall mean the shares or other securities issuable upon
exercise of one Right, initially one one-tenth share of Common Stock of the
Company, before any adjustment pursuant to Section 11(a)(ii) or Section 13.
"Voting Stock" shall mean shares of the Company's capital stock the
holders of which have general voting power.
(b) For purposes of this Agreement, a Person shall be deemed the
"Beneficial Owner" of any securities:
(i) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, (whether or not in writing) or upon the
exercise of any conversion, exchange or purchase rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of 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 payment or exchange; or (B) the right to vote
or to direct the voting of, pursuant to any agreement, arrangement or
understanding (whether or not in writing); or (C) the right to dispose or
to direct the disposition of, pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any securities of the
Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or understanding
to vote such security (1) arises solely from the grant of a revocable proxy or
consent given to such Person in connection with a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act, and (2) is not also then reportable on
Schedule 13D (or any comparable or successor report) under the Exchange Act;
provided, further, that a Person engaged in business as an underwriter of
securities shall not be deemed the "Beneficial Owner" of securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of the 40-day period immediately following the
date of such acquisition.
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Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agent or Agents as it may
deem necessary or desirable and determine the respective duties of the Rights
Agent and the Co-Rights Agents; provided, however, no such appointment or
allocation of duties shall change or increase the Rights Agent's duties,
liabilities or obligations. The Rights Agent shall have no duty to supervise,
and in no event shall be liable for, the acts or omissions of any such Co-Rights
Agent. Contemporaneously with such appointment, if any, the Company shall notify
the Rights Agent thereof.
Section 3. Issuance of Right Certificates.
(a) Until the Close of Business on the earlier of (i) the tenth Business
Day after a Stock Acquisition Date or (ii) the tenth Business Day (or such later
date as the Company's Board of Directors shall determine) after the date of the
commencement by any Person (other than an Exempt Person) of, or the date of the
first public announcement (such commencement date or announcement date being
herein referred to as the "Offer Date") of the intent of any Person (other than
an Exempt Person) to commence, a tender or exchange offer (other than a
Qualified Offer) upon the successful consummation of which such Person, together
with its Affiliates and Associates, would be the Beneficial Owner of 15% or more
of the then outstanding Voting Stock (irrespective of whether any shares are
actually purchased pursuant to such offer) (the tenth Business Day after the
first to occur of a Stock Acquisition Date or an Offer Date being herein
referred to as the "Distribution Date"),
(i) the Rights will automatically attach to, and be evidenced by, the
certificates for Common Stock registered in the names of the holders of
Common Stock (which certificates for Common Stock shall be deemed also to
be Right Certificates) and not by separate Right Certificates, and
(ii) each Right will be transferable only in connection with the
transfer of the underlying shares of Common Stock.
Upon the occurrence of a Distribution Date, the Company shall promptly
notify the Rights Agent and request a stockholder list from the Company's
transfer agent. As soon as practicable after the Rights Agent receives such
notice and stockholder list, the Rights Agent will mail, by first-class,
insured, postage prepaid mail, to each record holder of Common Stock as of the
Close of Business on the Distribution Date, as shown by the records of the
Company at the Close of Business on the Distribution Date, at the address of
such holder shown on such records, a Right Certificate, in substantially the
form of Exhibit A hereto, evidencing one Right for each share of Common Stock so
held.
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(b) As soon as practicable after the Rights Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B, by first-class mail, postage prepaid, to each record
holder of Common Stock as of the Close of Business on the Rights Record
Date, at the address of such holder shown on the records of the Company.
(c) The Company will cause certificates for Common Stock issued after
the Rights Record Date (including replacement certificates for shares of
Common Stock outstanding on or prior to the Rights Record Date), but prior
to the earliest of (i) the Distribution Date, (ii) the Expiration Date and
(iii) the date, if any, on which the Rights may be redeemed, to have
impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between the Company and American
Stock Transfer & Trust Company as Rights Agent as the same shall be
amended from time to time (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement)
or certain transferees of any thereof, whether currently held by or on
behalf of such Person or by any subsequent holder, may be limited as
provided in Section 7(f) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
(d) Until the Distribution Date, the surrender for transfer of any of
the certificates for Common Stock outstanding on or after the Rights Record
Date, with or without a copy of the Summary of Rights attached thereto and
with or without the legend set forth in subsection (c) above, shall also
constitute the transfer of the Rights associated with such Common Stock.
After the Distribution Date, the Rights will be evidenced solely by the
Right Certificates.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of assignment and
certification and of election to purchase shares to be printed on the
reverse thereof) shall be in substantially the form of Exhibit A hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate (which do not affect the duties or responsibilities of the
Rights Agent) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage.
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(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights Beneficially Owned by: (i) an Acquiring Person or
any Associate or Affiliate of any Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom such
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 Section
7(f), and any Right Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent
feasible and reasonably identifiable as such) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) or certain transferees thereof.
Accordingly, under certain circumstances as provided in the Rights
Agreement, this Right Certificate and the Rights represented hereby
may be limited as provided in Section 7(f) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any of its Vice Presidents,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company 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, issued and delivered with the same force and effect as
though the person who signed such Right Certificates had not ceased to be
such officer of the Company; 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 (as
specified above) of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not
such an officer.
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(b) Following the Distribution Date and receipt by the Rights Agent of
the notice and list of record holders referred to in Section 3(a) above,
the Rights Agent will keep or cause to be kept 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 Right
Certificate, the date of each Right Certificate and the number of each
Right Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(f) and
Section 14, at any time after the Close of Business on the Distribution
Date, and prior to the Close of Business on the Expiration Date or the day
prior to the day, if any, on which the Rights are to be redeemed pursuant
to Section 23, any Right Certificate or Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase such number of
Units as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate(s) to be transferred, split up, combined or
exchanged, with the form of assignment on the reverse side(s) thereof duly
completed and executed, at the office of the Rights Agent designated
pursuant to Section 25 hereof. Thereupon the Rights Agent shall countersign
and deliver to the persons entitled thereto the Right Certificate(s)
requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates. The
Rights Agent may delay the processing of such transaction until it receives
evidence that all applicable taxes and governmental charges have been paid.
Notwithstanding the foregoing, 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 unless and until the
registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Right Certificate and
shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
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 satisfactory to them, and 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 execute and deliver a new Right Certificate of
like tenor to the Rights Agent for delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(f), and unless earlier redeemed as provided
in Section 23, 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 on the reverse side thereof duly completed and
executed, to the Rights Agent at the office of the Rights Agent, together
with payment of the Purchase Price for each Unit as to which the Rights are
exercised, at or prior to the Close of Business on the third anniversary of
the Rights Record Date or such other date to which the Rights may be
extended as provided in this Agreement (the latest of such dates being
herein referred to as the "Expiration Date"). If at any time after the
Distribution Date but prior to the Expiration Date the Company is unable,
under its Certificate of Incorporation, to issue the number and class of
shares required to be issued upon the exercise of all of the outstanding
Rights, the Company may issue upon exercise of any of the Rights shares of
capital stock or other securities of the Company of equivalent value to the
shares so required to be issued ("Equivalent Stock"), as determined by the
Board of Directors.
(b) The Purchase Price for each Unit pursuant to the exercise of a
Right shall initially be $3.00, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful money
of the United States of America.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for
the Units to be purchased and an amount equal to any applicable tax or
governmental charge in cash, or by certified check, bank draft or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the Company or any transfer agent of the
Company a certificate for the number of shares to be purchased and the
Company will comply, and hereby irrevocably authorizes its transfer agent
to comply, with all such requests, (ii) requisition from the Company the
amount of cash to be paid in lieu of issuance of a fractional share, when
appropriate, in accordance with Section 14, and (iii) promptly after
receipt of such certificate from any such transfer agent, 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, when appropriate, after receipt promptly deliver such cash in
lieu of a fractional share to or upon the order of the registered holder of
such Right Certificate; provided, however, that in the case of the
purchase, in connection with the exercise of a Right, of securities other
than shares of stock, the Rights Agent shall promptly take the appropriate
actions with respect thereto as shall as nearly as practicable correspond
to the actions described in the foregoing clauses (i) through (iii).
(d) The Company shall not be required to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates, or the issuance or delivery of certificates
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 upon the exercise of any Rights, until any such tax shall have
been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
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(e) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14.
(f) Notwithstanding any provision of this Agreement to the contrary,
upon the occurrence of any of the events described in any of clauses (A),
(B), (C) or (D) of Section 11(a)(ii), the adjustment provided for under
Section 11(a)(ii) shall not apply with respect to any Rights that are at
the time of the occurrence of such event Beneficially Owned by (i) an
Acquiring Person or by any Associate or Affiliate of such Acquiring Person
(which Acquiring Person or Affiliate or Associate engages in, or realizes
the benefit of, one or more of the transactions described in clause (A) or
clause (B) of Section 11(a)(ii), realizes the benefits set forth in clause
(C) of Section 11(a)(ii) or, alone or together, become the Beneficial
Owner(s) of a number of shares of Voting Stock which equals or exceeds the
percentage of the general voting power as provided in clause (D) of Section
11(a)(ii), as the case may be), or (ii) a transferee of an Acquiring Person
or of any Associate or Affiliate of such Acquiring Person (which Acquiring
Person or Associate or Affiliate engages in, or realizes the benefit of,
one or more of the transactions described in clause (A) or clause (B) of
Section 11(a)(ii), realizes the benefits set forth in clause (C) of Section
11(a)(ii) or, alone or together with such Acquiring Person or any such
Associate or Affiliate, become the Beneficial Owner(s) of a number of
shares of Voting Stock which equals or exceeds the percentage of the
general voting power as provided in clause (D) of Section 11(a)(ii), as the
case may be) (A) who becomes a transferee after the Acquiring Person
becomes such, or (B) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to
either (1) 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 such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) 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 the avoidance of this Section 7(f). Upon the exercise of such
Rights, the holders thereof shall be entitled to receive, upon payment of
the Purchase Price, the number of Units issuable upon exercise of such
Rights without giving effect to the adjustment provided for under Section
11(a)(ii). The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(f) and Section 4(b) are complied with, but
shall have no liability to any holder of Right Certificates or other Person
as a result of its making or failing to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the
Rights Agent shall reasonably request.
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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 cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and 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 cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares; Registration.
(a) The Company covenants and agrees that it shall (i) on or prior to the
Rights Record Date, take all such action as shall be necessary to cause to be
reserved and kept available out of its authorized and unissued capital stock,
the number, class and series of shares that will be sufficient to permit the
exercise in full of all Rights to be outstanding as of the Rights Record Date,
(ii) no later than promptly following the Distribution Date, take all such
action as shall be necessary to cause to be reserved and kept available out of
its authorized and unissued capital stock, or its authorized and issued shares
held in its treasury, the number of additional shares that will, from time to
time, be sufficient to permit the exercise in full of all Rights from time to
time outstanding, (iii) take all such action as may be necessary to insure that
all shares 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, and
(iv) pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares upon the exercise of Rights (except as otherwise
provided in Section 7(d)).
(b) The Company agrees to take all such action, from and after the
Distribution Date, as may be necessary or appropriate to permit the issuance of
shares in connection with the exercise of the Rights, including any required
registration under (i) the Securities Act of 1933, as amended from time to time
(the "Securities Act"), and (ii) the securities or "blue sky" laws of the
various states. 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 or statements for the purpose of effecting any such
registration and permit such statement(s) to become effective. At the
commencement and termination of any such suspension, the Company shall issue a
public announcement and shall provide written notice to the Rights Agent,
stating that the exercisability of the Rights has been temporarily suspended, or
that such suspension has terminated, as the case may be.
11
(c) If and so long as the stock issuable upon the exercise of Rights is
listed on any national securities exchange, the Company shall use its reasonable
efforts to cause all shares reserved for issuance upon exercise of Rights to be
listed on such exchange upon official notice of issuance upon such exercise.
Section 10. Record Date. Each Person in whose name any stock certificate is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares 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 and other governmental charges) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including without
limitation the right to vote or to receive dividends or other distributions, and
such holder 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 and kind of shares or other securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the shares which are subject to the
Rights ("Subject Shares") payable in shares of stock of the Company, (B)
subdivide or split the Subject Shares, (C) combine or consolidate the Subject
Shares into a smaller number of shares or effect a reverse stock split of the
Subject Shares or (D) issue any shares of its capital stock in a
reclassification of the Subject Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and in each such event, except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
split, reverse split, combination, consolidation 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 transfer books of the Company were open, he would
have received upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, split, reverse split, combination, consolidation or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that at any time after the date of this Agreement
12
(A) any Acquiring Person, or any Associate or Affiliate of any
Acquiring Person, directly or indirectly (1) shall merge into the Company
or any of its Subsidiaries or otherwise combine with the Company or any of
its Subsidiaries and the Company or such Subsidiary shall be the continuing
or surviving corporation of such merger or combination and the Common Stock
shall remain outstanding and the outstanding shares thereof shall not be
changed into or exchanged for stock or other securities of the Company or
of any other Person or cash or any other property, or (2) shall sell or
otherwise transfer in one or more transactions, assets to the Company or
any of its Subsidiaries in exchange for 25 percent or more of the shares of
any class of capital stock of the Company or any of its Subsidiaries, and
the Common Stock shall remain outstanding and unchanged, or
(B) directly or indirectly, any Acquiring Person, or any Associate or
Affiliate of any Acquiring Person, shall (1) in one or more transactions,
transfer any assets to the Company or any of its Subsidiaries in exchange
(in whole or in part) for shares of any class of capital stock of the
Company or any of its Subsidiaries or for securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries or other
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries (other than as part
of a pro rata distribution by the Company or such Subsidiary to all holders
of Common Stock), (2) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one or more transactions), to, from or
with, as the case may be, the Company or any of its Subsidiaries, assets on
terms and conditions less favorable to the Company or such Subsidiary than
the Company or such Subsidiary would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (3) receive any compensation
from the Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee, or fees for
serving as director, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (4) receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance provided by the
Company or any of its Subsidiaries, on terms and conditions less favorable
to the Company or such Subsidiary than the Company or such Subsidiary would
be able to obtain in arm's-length negotiation with an unaffiliated third
party, or
(C) during any such time as there is an Acquiring Person, there shall
be any reclassification of securities (including any reverse stock split),
or recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other similar transaction or
series of transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving an Acquiring Person or
any Affiliate or Associate of such Acquiring Person) which has the effect,
directly or indirectly, of increasing by more than one percent the
proportionate share of the outstanding shares of any class of equity
securities, or of securities exercisable for or convertible into equity
securities, of the Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, or
13
(D) any Person shall become an Acquiring Person otherwise than
pursuant to a Qualified Offer,
then, and in each such case, but subject to the provisions of Section 27, proper
provision shall be made so that each holder of a Right, except as provided below
and in Section 7(f), shall, on and after the later of (I) the date of the
occurrence of an event described in clause (A), (B), (C) or (D) of this Section
11(a)(ii), or (II) the date of the expiration of the period within which the
Rights may be redeemed pursuant to Section 23 (as the same may have been amended
as provided in Section 26), have the right to receive, upon exercise thereof and
payment of ten times the then current Purchase Price, such number of shares of
Common Stock as shall equal the result obtained by (x) multiplying by ten the
product of the then current Purchase Price and the then number of Units for
which a Right is then exercisable and dividing that product by (y) 50 percent of
the current market price per share of Common Stock (determined in accordance
with Section 11(d)) on the date of the occurrence of the relevant event listed
above in clause (A), (B), (C) or (D) of this subparagraph (ii); 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(a)(ii). The Company shall not consummate any such merger,
combination, transfer or transaction referred to in any of such clauses (A), (B)
and (C) unless prior thereto there shall be sufficient authorized but unissued
Common Stock to permit the exercise in full of the Rights in accordance with the
foregoing sentence, unless the Board of Directors has determined to issue
Equivalent Stock in accordance with Section 7(a); provided, however, that in no
case may the Company consummate any such merger, combination, transfer or
transaction if at the time of or immediately after such 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.
In the event that the Company issues Equivalent Stock upon the exercise of
any Rights pursuant to the immediately preceding paragraph, then, upon any such
exercise, proper provision shall be made so that the holder of a Right (except
as provided in Section 7(f)) shall have the right to receive, upon such exercise
at the then current Purchase Price, such number of shares or other units of
Equivalent Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of Units for which a
Right is then exercisable and dividing that product by (y) 50 percent of the
current market price per share or other unit of the Equivalent Stock of the
Company (determined on substantially the same basis as is prescribed by Section
11(d) with respect to the valuation of Common Stock) on the date of occurrence
of the relevant event listed above in clause (A), (B), (C) or (D) of this
subparagraph (ii). In the event that at any time the Company should be
prohibited by law, by any provision of its Certificate of Incorporation, or by
any instrument or agreement to which the Company is a party or by which it is
bound, from issuing, or should be unable under its Certificate of Incorporation
to issue, sufficient Equivalent Stock to permit the exercise of all outstanding
Rights in accordance with the foregoing sentence, then, in lieu of issuing such
Equivalent Stock upon such exercise, the Company shall pay to each holder of a
Right (except as provided in Section 7(f)) upon surrender of the Right as
provided herein but without payment of the Purchase Price, an amount in cash for
each Right equal to the Purchase Price.
14
(b) In case the Company shall at any time after the Rights Record Date fix
a record date for the issuance of rights or warrants to all holders of Common
Stock or Subject Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common Stock or
Subject Shares or securities convertible into Common Stock or Subject Shares at
a price per share (or having a conversion price per share, if a security
convertible into Common Stock) less than the current market price per share
(determined in accordance with Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the total number of shares of Common
Stock and Subject Shares outstanding on such record date plus the number of
shares of Common Stock which the aggregate offering price of the total number of
shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and of which the denominator shall be the total number of shares of Common
Stock and Subject Shares outstanding on such record date plus the number of
additional shares to be offered for subscription or purchase (or into which the
convertible securities to be offered are initially convertible). In case such
subscription or purchase price may be paid, in whole or in part, 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. Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall at any time after the Rights Record Date fix
a record date for the making of a distribution on the shares of Common Stock or
the Subject Shares, whether by way of a dividend, distribution, reclassification
of stock, recapitalization, reorganization or partial liquidation of the Company
or otherwise (and including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation), of
subscription rights or warrants (excluding those referred to in Section 11(b)),
evidences of indebtedness or other assets (other than (i) regular periodic cash
dividends, (ii) a dividend payable in Common Stock or (iii) a distribution which
is part of or is made in connection with a transaction to which Section
11(a)(ii) or Section 13 applies), 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, of which the numerator
shall be the current market price per share of Common Stock (determined in
accordance with Section 11(d)) on such record date, less the fair market value
applicable to one share of Common Stock (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 such assets or evidences of
indebtedness or of such subscription rights or warrants so to be distributed,
and of which the denominator shall be such current market price per share of
Common Stock. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
15
(d) For the purpose of any computation hereunder, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; provided, however, that
in the event that the current market price per share of Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of Common
Stock (other than the Rights), and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, then, and in each
such case, the current market price shall be appropriately adjusted to reflect
the current market price per share of Common Stock in connection with
ex-dividend trading. 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 shares of Common Stock 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 shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc., Automated Quotation System ("NASDAQ").
If on any such date the shares of Common Stock are not quoted by any such
organization, the fair market value of such shares on such date as determined in
good faith by the Board of Directors of the issuer of such Common Stock shall be
used. Any such determination of current market price shall be described in a
statement filed with the Rights Agent.
For the purpose of any computation hereunder, the "current market price" of
a Unit shall be deemed to be equal to the current market price per share of
Common Stock, and the "current market price" of a Subject Share shall be deemed
to be equal to the current market price per share of Common Stock divided by the
number of Subject Shares which comprise a Unit.
For purposes of this Agreement, the term "Trading Day" shall mean a day on
which the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day.
16
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent in such
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. Notwithstanding the proviso to the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which gives
rise to such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
shares of Common Stock, 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 such shares, contained in Sections 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the shares of
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall represent the right to
purchase, at the adjusted Purchase Price, the number of shares purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest one-hundredth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect (and shall provide the Rights Agent with notice
of such election) 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 shares purchasable upon the exercise of each Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of Units for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i) the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14, 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.
17
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares 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 shares which were expressed in the
initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 requires that an adjustment in the
Purchase Price be made effective as of the record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuance
to the holder of any Right exercised after such record date of the additional
shares or securities of the Company, if any, issuable as a consequence of 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 or securities upon the occurrence of such event.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the number of shares which
may be acquired upon exercise of the Rights, and such adjustments in the
Purchase Price, in addition to those adjustments expressly required by the other
subsections of this Section 11, as and to the extent that the Company, in its
sole discretion, shall determine to be advisable, in order that, in the event of
(i) any reclassification, consolidation or subdivision of the Common Stock, (ii)
any reorganization or partial liquidation of the Company or similar transaction,
(iii) any issuance wholly for cash of any Common Stock at less than the current
market price, (iv) any issuance wholly for cash of Common Stock or securities
which by their terms are convertible into or exchangeable for Common Stock, (v)
any stock dividends or (vi) any issuance of rights, options or warrants,
hereafter made by the Company to holders of its Common Stock as provided
herein-above in this Section 11, (x) the holders of the Rights in any such event
shall be treated equitably and in accordance with the purpose and intent of this
Agreement, and (y) to the extent reasonably possible, such event shall not, in
the opinion of counsel for the Company, result in the stockholders of the
Company being subject to any United States federal income tax liability by
reason thereof.
18
Section 12. Certification of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13, the Company
shall (i) promptly prepare a certificate setting forth such adjustment, and a
brief, reasonably detailed statement of the facts, computations and methodology
accounting for such adjustment, (ii) promptly file with the Rights Agent and
with each transfer agent for the Common Stock a copy of such certificate, and
(iii) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25. Notwithstanding the foregoing sentence, the failure
of the Company to give such notice shall not affect the validity of, or the
force or effect of, the requirement for such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, at any time after an Acquiring Person has become
such,
(i) the Company shall consolidate with, or merge with and into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(ii) any other Person(s) shall consolidate or merge with and into the
Company, the Company shall be the continuing or surviving corporation of
such merger and, in connection with such consolidation or merger, all or
part of the Common Stock shall be changed into or exchanged for stock or
other securities of the Company or of any other Person or cash or any other
property, or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50 percent of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person, (other than a pro rata distribution by the
Company of assets (including securities) of the Company or any of its
Subsidiaries to all holders of the Company's Common Stock),
then, on and after the later of (I) the date of the occurrence of an event
described in clause (i), (ii) or (iii) of this Section 13(a), or (II) the date
of the expiration of the period within which the Rights may be redeemed pursuant
to Section 23 (as the same may have been amended as provided in Section 26):
(A) 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, such number of shares of common
stock of the Principal Party as shall be equal to the result obtained
by (x) multiplying the then current Purchase Price by the number of
Units for which a Right is then exercisable and dividing that product
by (y) 50 percent of the current market price per share of the common
stock of the Principal Party (determined in the same manner as the
current market price of Common Stock is determined under Section
11(d)) on the date of consummation of such consolidation, merger, sale
or transfer;
19
(B) the 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,
and proper provision shall be made for the foregoing, provided that
the Principal Party shall, prior to the first occurrence of an event
described in clause (i), (ii) or (iii) of this Section 13(a), have
caused to be reserved out of its authorized and unissued shares of
common stock (or its authorized and issued shares of common stock held
in its treasury), for issuance pursuant to this Agreement, the number
of shares of common stock that will be sufficient to permit the
exercise in full of the Rights after the occurrence of such event;
(C) the term "Company" wherever used in this Agreement shall
thereafter be deemed to refer to such Principal Party; and
(D) the Principal Party shall, in addition to the reservation of
shares of its common stock as provided in the proviso to clause (B)
above, take such steps (including without limitation compliance with
the Company's other obligations as set forth in 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 the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided,
however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization 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, 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 shares of common stock of the Principal Party
purchasable upon the exercise of a Right, 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.
(b) For purposes of this Agreement, "Principal Party" shall mean
(i) in the case of any transaction described in clause (i) or (ii) of
Section 13(a), (A) the Person that is the issuer of the securities into
which shares of Common Stock are converted in such merger or consolidation,
or, if there is more than one such issuer, the issuer the common stock of
which has the greatest market value, or (B) if no securities are so issued,
(x) the Person that is the other party to the merger or consolidation and
that survives said merger or consolidation, or, if there is more than one
such Person, the Person the common stock of which has the greatest market
value or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person that
does so survive (including the Company if it survives); and
20
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), 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 stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the common stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation; (2) if the common stock of such Person is not and has not been so
registered and such Person is not a direct or indirect Subsidiary of another
corporation the common stock of which is and has been so registered, "Principal
Party" shall refer to the corporation which ultimately controls such Person; (3)
in case such Person is a Subsidiary, directly or indirectly, of more than one
corporation, the common stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such corporations is the issuer of
common stock having the greatest market value of shares held by the public; and
(4) if the common stock of such Person is not and has not been so registered and
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), (2) and (3) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a "Subsidiary" of both or all of such joint venturers and the Principal
Party in each such chain shall bear the obligations set forth in this Section 13
in the same ratio as its direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless prior thereto the Company and the Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement making valid
provision for the results described in clause (A) of Section 13(a) and
confirming that the Principal Party will perform its obligations under this
Section 13; provided, however, that in no case may the Company consummate any
such consolidation, merger, sale or transfer if (i) at the time of or
immediately after such 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 or (ii) prior to, simultaneously with or immediately
after such transaction, the shareholders of the Person which constitutes, or
would constitute, the Principal Party for purposes of this Section 13 shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
21
(d) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. This Section 13 shall not
be applicable to a transaction described in Subparagraphs (i), (ii) or (iii) of
Subsection (a) of this Section if (i) such transaction is consummated with a
Person or Persons who acquired Common Stock pursuant to a Qualified Offer (or a
wholly owned subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction or distributable to shareholders
upon conclusion of such transaction is not less than the price per share of
Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Qualified Offer and (iii) the form of consideration being
offered to the remaining holders of Common Stock pursuant to such transaction or
distributable to shareholders upon conclusion of such transaction is the same as
the form of consideration paid pursuant to such Qualified Offer. Upon conclusion
of any transaction described in the foregoing sentence, all Rights shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. If the Company
shall elect not to issue such fractional Rights, in lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such Fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ.
If on any such date the Rights are not quoted by any such organization, 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. Any such determination of current market
value shall be described in a statement filed with the Rights Agent.
(b) The Company shall not be required to issue fractions of shares upon
exercise of a Right or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company shall pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share of Common Stock. For purposes of this Section 14, the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)) for the Trading Day immediately prior to the date of such exercise.
22
(c) The holder of a Right by the acceptance thereof expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise of
a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of the
Common Stock), and any registered holder of any Right Certificate (or, prior to
the Distribution Date, any registered holder of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, any other registered holder of the Common
Stock), may, on his own behalf and for his own benefit, enforce, and may
institute and maintain, any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 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 Common Stock;
(b) on and after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the designated office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; 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 Stock 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 Stock 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 Common Stock or any other securities
of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 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.
23
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the preparation, delivery, amendment, 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, damage, judgement, fine, penalty,
claim, demand, settlement, cost or expense incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent as determined by
a court of competent jurisdiction for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided herein shall survive the
termination of this Agreement and the termination, redemption or expiration of
the Rights. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
(b) The Rights Agent shall be authorized and protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or Certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it, acting with reasonable care, to be genuine and
to be signed, executed and, where necessary, verified or acknowledged, by the
proper person or persons.
If and for so long as the Rights are listed on the New York Stock Exchange
or the American Stock Exchange, the Rights Agent, if its principal offices are
located outside New York City, shall maintain in the New York City area
facilities for the servicing of the Rights in the area of Manhattan located
south of Xxxxxxxx Street. Such facilities may consist of either an office or
agency where transactions in the Rights are serviced directly or a "drop" where
Common Stock certificates, Right Certificates, and other instruments relating to
transactions in Rights may be received for redelivery to an office or agency
outside New York City, all in accordance with the applicable rules of the stock
exchange on which the Rights are listed.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
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 Person 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.
24
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name, 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, and only the duties and obligations, expressly imposed by this
Agreement (and no implied duties and obligations) upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent with respect
to, and the Rights Agent shall incur no liability for or in respect of, any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President,
any Vice President, or the Secretary of the Company and delivered to the Rights
Agent, and such certificate shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct as determined by a court of
competent jurisdiction. In no event shall the Rights Agent be liable for
special, indirect, punitive, incidental or consequential loss or damages of any
kind whatsoever (including without limitation lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage. Any liability
of the Rights Agent under this Agreement shall be limited to the amount of fees
paid by the Company to the Rights Agent.
25
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any liability or 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 adjustment required under the provisions of
Section 11 or 13 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 adjustment), nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of stock to be issued pursuant to
this Agreement or any Right Certificate or as to whether any shares of stock
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President or the Secretary of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, such instructions shall be full authorization and protection to
the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer. The Rights Agent may conclusively rely on
the most recent instructions given by any such officer.
(h) The Rights Agent and any shareholder, affiliate, 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.
26
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first obtaining the Company's approval.
Section 21. Change of Rights Agent. Unless the Company and the Rights Agent
agree to a shorter time period, the Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 15 days'
notice in writing mailed to the Company and to each transfer agent of Common
Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. Unless the Company and the Rights Agent agree
to a shorter time period, the Company may remove the Rights Agent or any
successor Rights Agent upon 15 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of Common Stock 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 Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 15 days after 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 (including a limited liability company) organized and doing business
under the laws of the United States or of the State of California or the State
of New York (or of any other state so long as such corporation is authorized to
do business in California or New York) in good standing, which is authorized
under such laws to exercise stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. 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
Common Stock and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
27
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 Expiration Date, the Purchase Price per share or the number or kind or class
of shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option and as
provided herein, and notwithstanding the provisions of Sections 11 and 13 of
this Agreement, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend, reclassification or similar
transaction occurring after the date hereof (such redemption price being herein
referred to as the "Redemption Price") at any time up to the Close of Business
on the tenth Business Day after a Stock Acquisition Date.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make a public announcement
thereof, and from and after the date of such announcement, without any further
action and without any further notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Rights Agent shall be notified immediately of
such Board action. As soon as practicable after the election of the Board of
Directors to redeem the Rights, the Company shall 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. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. Notice of Proposed Actions. In case the Company, after the
Rights become exercisable, shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Stock or the Subject Shares or
to make any other distribution to the holders of its Common Stock or Subject
Shares (other than a regular periodic cash dividend), or (ii) to offer to the
holders of its Common Stock or Subject Shares rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock or Subject Shares (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock) or any recapitalization or reorganization of the Company, or (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50 percent of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify the record date for the purposes of
such dividend, distribution of rights or warrants, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of Common Stock and/or Subject 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 (i) or (ii) above at least twenty days prior to
the record date for determining holders of the Common Stock and/or Subject
Shares for purposes of such action, and in the case of any such other action, at
least twenty days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock and/or Subject
Shares, whichever shall be the earlier. The failure to give notice required by
this Section 24 or any defect thereon shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.
28
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:
Advanced Marketing Services, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
President and Chief Executive Officer
Subject to the provisions of Section 21, 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
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates; provided, however, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time period, unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary: (1) no supplement or
amendment shall be made which changes the Redemption Price, the Purchase Price
or the number of shares or Units for which a Right is exercisable; and (2) the
duration of the Rights may not be shortened without the written consent of the
registered holders thereof (other than by a redemption of the Rights pursuant to
Section 23). Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
29
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become subject to the provisions of Section 7(f) hereof) for Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice and written notice to the Rights Agent
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 will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become subject to
the provisions of Section 7(f) hereof) held by each holder of Rights.
30
(c) In the event that there shall not be sufficient authorized Common Stock
to permit an exchange of Rights as contemplated in accordance with this Section,
the Company shall take all such action as may be necessary to authorize
additional Common Stock or Equivalent Stock for issuance upon exchange of the
Rights.
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. Determination and Actions Taken by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock (or other applicable securities hereunder) outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock (or other securities) of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) (as in effect on the date of this Agreement) of
the General Rules and Regulations under the Exchange Act. The Board of Directors
of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to such
Board 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 a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (B) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (A) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (B) not subject the Board to
any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the holders of Common Stock) any legal or equitable right, remedy or claim
under this Agreement. This Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock).
Section 31. 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 made and to be performed
entirely within such State. The rights and obligations of the Rights Agent under
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed within
such State.
31
Section 32. 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 33. Section Headings. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
Section 34. 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, illegal, or unenforceable, (i) such invalid, illegal or
unenforceable term, provision, covenant or restriction shall nevertheless be
valid, legal and enforceable to the extent, if any, provided by such court or
authority, and (ii) 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE COMPANY:
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
Title: Executive Vice President,
General Counsel and Secretary
THE RIGHTS AGENT:
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
32
Exhibit A
---------
[Form of Right Certificate]
Certificate No. R-_____ Rights
NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF
REDEMPTION IS MADE. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
AGREEMENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO
A PERSON WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE
OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR CERTAIN TRANSFEREES
THEREOF, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN
LIMITATIONS IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7 OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 9, 2005 (the "Rights Agreement"), between Advanced
Marketing Services, Inc., (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent"), to purchase from the Company, unless the Rights
have been previously redeemed, at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to the Expiration Date (as
such term is defined in the Rights Agreement), or the date, if any, on which the
Rights evidenced by this Certificate may be redeemed, at the designated office
of the Rights Agent, or its successors as Rights Agent, one one-tenth fully paid
and nonassessable share of Common Stock at a purchase price of $3.00 (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly completed and executed. The number of
Rights evidenced by this Right Certificate as set forth above (and the number of
shares which may be purchased upon exercise thereof), and the Purchase Price set
forth above, are the number and Purchase Price as of the date of the Rights
Agreement based on the shares of Common Stock of the Company as constituted at
such date.
1
Upon the occurrence of an event described in clause (A), (B), (C) or (D) of
Section 11(a)(ii) of the Rights Agreement, the holder of any Rights that are, or
were, beneficially owned by an Acquiring Person or an Associate or Affiliate
thereof (as such terms are defined in the Rights Agreement) or certain
transferees thereof which engaged in, or realized the benefit of, an event or
transaction or transactions described in clause (A), (B), (C) or (D) of such
Section 11(a)(ii), shall not be entitled to the benefit of the adjustment
described in such Section 11(a)(ii).
As provided in the Rights Agreement, the Purchase Price and the number and
class of 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 Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent and
at the principal office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent set forth hereon, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase such number of shares as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.001 per Right.
No fractional shares will be issued upon the exercise of any Rights
evidenced hereby, but in lieu thereof a cash payment may be made, as provided in
the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
2
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the Company.
Dated as of ____________, 20__.
Attest:
__________________________ By: _________________________
Secretary Title:
Countersigned:
__________________________ as Rights Agent
[Designated Office]
By: ____________________
Authorized Signature
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________ hereby sells, assigns and
transfers unto____________________
____________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: ____________, 20__ ______________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) the undersigned [ ] did [ ] 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 of an Acquiring Person.
Date:______________, 20__ ______________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
4
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To the Company and the Rights Agent:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate and to purchase the shares issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of: Please insert social security or other identifying
number: _____________________________
___________________________________________________________
(Please print name and address)
____________________________________________________________ If such number of
Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number: _____________________________
________________________________________________________________
(Please print name and address)
________________________________________________________________
Dated: ______________, 20__
Signature: ____________________
(Signature must conform in all respects to name
of holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
5
CERTIFICATE
-----------
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) the undersigned [ ] did [ ] 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 of an Acquiring Person.
Date: ______________, 20__ ______________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
