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EXHIBIT 4.1
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PREFERRED SHARE PURCHASE RIGHTS PLAN
RIGHTS AGREEMENT
BETWEEN
QUEST EDUCATION CORPORATION
AND
FIRST UNION NATIONAL BANK,
AS RIGHTS AGENT
DATED AS OF MAY 14, 1999
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TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions......................................................1
Section 2. Appointment of Rights Agent..............................................5
Section 3. Issuance of Rights Certificates..........................................6
Section 4. Form of Rights Certificates..............................................7
Section 5. Countersignature and Registration........................................8
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.......................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...........10
Section 8. Cancellation and Destruction of Rights Certificates.....................11
Section 9. Reservation and Availability of Preferred Shares........................12
Section 10. Preferred Stock Record Date............................................13
Section 11. Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights; Exchange of Rights
for Shares of Common Stock.............................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.............22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...22
Section 14. Fractional Rights and Fractional Shares................................25
(i)
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Section 15. Rights of Action.......................................................25
Section 16. Agreement of Rights Holders............................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder.....................26
Section 18. Concerning the Rights Agent............................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent..............26
Section 20. Duties of Rights Agent.................................................27
Section 21. Change of Rights Agent.................................................29
Section 22. Issuance of New Rights Certificates....................................30
Section 23. Redemption and Termination.............................................30
Section 24. Notice of Certain Events...............................................31
Section 25. Notices................................................................31
Section 26. Supplements and Amendments.............................................32
Section 27. Successors.............................................................33
Section 28. Determinations and Actions by the Board of Directors, etc..............33
Section 29. Benefits of this Rights Plan...........................................34
Section 30. Severability...........................................................34
Section 31. Governing Law..........................................................34
(ii)
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Section 32. Consent to Jurisdiction; Service of Process............................34
Section 33. Counterparts...........................................................34
Section 34. Descriptive Headings...................................................34
Section 35. Consequential Damages..................................................34
EXHIBITS
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Rights Certificate
Exhibit C - Form of Summary of Rights
(iii)
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RIGHTS AGREEMENT, dated as of May 14, 1999 (the "Rights Plan" or the
"Agreement"), by and between QUEST EDUCATION CORPORATION, a Delaware corporation
(the "Company"), and FIRST UNION NATIONAL BANK, a national banking institution
(the "Rights Agent").
RECITALS
WHEREAS, on May 14, 1999 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one preferred share purchase right (each, a "Right" and,
collectively, the "Rights") for each share of Common Stock, par value $0.01 per
share, of the Company outstanding at the close of business on May 21, 1999 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock issued (as hereinafter defined) between the Record
Date and the earliest to occur of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined), all on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, each Right shall initially represent the right to purchase one
one-thousandth of a Preferred Share (as defined below), upon the terms and
subject to the conditions hereinafter set forth. Preferred Shares shall mean
shares of Series A Junior Participating Preferred Stock, par value $0.01 per
share, of the Company having the rights and preferences set forth in the Form of
Certificate of Designations attached to this Agreement as Exhibit A.
AGREEMENT -- SHARE PURCHASE RIGHTS PLAN
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Rights Plan, the
following terms have the meanings indicated (capitalized terms within any
definition shall have the meanings indicated elsewhere herein with respect to
such terms):
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of fifteen percent (15.0%) or more of the shares of Common
Stock then outstanding. Notwithstanding the foregoing, the term "Acquiring
Person" shall not mean or include (i) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan; (ii) any Person who or
which, together with all Affiliates and Associates of such Person, would be an
Acquiring Person solely by reason of a reduction in the number of issued and
outstanding shares of Common Stock of the Company pursuant to a transaction or a
series of related transactions voted on and approved by a Majority Director Vote
(as defined below); provided, however, that in the event that such Person
described in the foregoing clause (ii) does not become an Acquiring Person by
reason of the foregoing clause (ii), such Person shall nonetheless become an
Acquiring Person in the event such Person thereafter acquires Beneficial
Ownership of an additional 1.0% of the issued and outstanding Common Stock of
the Company, unless such additional Common Stock ownership results solely from a
subsequent reduction in the
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number of issued and outstanding shares of Common Stock of the Company pursuant
to a transaction or a series of related transactions approved by a Majority
Director Vote; (iii) any Person who or which, together with all Affiliates and
Associates of such Person, would be an Acquiring Person solely by reason of a
transaction in which the Company (or one or more of its Subsidiaries) acquires a
business (whether such acquisition is accomplished by means of a purchase of
stock or assets, a merger, share exchange or otherwise) owned by such Person in
exchange (in whole or in part) for shares of Common Stock of the Company
pursuant to a transaction (or a series of related transactions) approved by a
Majority Director Vote (an "Approved Acquisition Transaction"); provided,
however, that in the event that such Person described in the foregoing clause
(iii) does not become an Acquiring Person by reason of the foregoing clause
(iii), such Person shall nonetheless become an Acquiring Person in the event
such Person thereafter acquires Beneficial Ownership of an additional 1.0% of
the issued and outstanding Common Stock of the Company, unless such additional
Common Stock ownership results solely from a reduction in the number of issued
and outstanding shares of Common Stock of the Company (such as that described in
clause (ii) above), or a subsequent Approved Acquisition Transaction, pursuant
to a transaction or a series of related transactions approved by a Majority
Director Vote; or (iv) any Person that on the date of this Rights Agreement is
the Beneficial Owner of ten percent (10.0%) or more of the outstanding Common
Stock (a "10% Person") unless and until such 10% Person becomes the Beneficial
Owner of twenty-five percent (25%) or more of the outstanding Common Stock;
provided, however, that notwithstanding any other term or provision of this
Rights Agreement, this subclause (iv) of Section 1(a) of this Rights Agreement
shall relate solely to such 10% Person(s) existing on the date of this Agreement
(and, if such any such 10% Person is an investment fund manager, to the funds
actively managed by such 10% Person together with such 10% Person in the
aggregate), and not to the affiliates, associates, successors or assigns of such
10% Person; but if at any time the 10% Person sells or otherwise disposes of
Common Stock so that the 10% Person becomes the Beneficial Owner of less than 9%
of the outstanding Common Stock, then the exception provided by this clause (iv)
shall terminate and such Person shall no longer be a 10% Person. Notwithstanding
the foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provision, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions, then such Person shall not be deemed to be
an "Acquiring Person" for any purposes of this Agreement.
(b) "Acquiring Person Transferee" shall have the meaning set forth
in Section 7(e) hereof.
(c) "Act" shall mean the Securities Act of 1933, as amended.
(d) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(e) "Associate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
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(f) A Person shall be deemed the "beneficial owner" of, and shall
be deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has 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 conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own", (A)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) any security
with respect to which such person has the right to vote pursuant to any
agreement, arrangement or understanding, if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act, and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Persons Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
proviso (B) to subparagraph (ii) of this Section 1(f)) or disposing of any
voting securities of the Company; provided, however, that nothing in this
Section 1(f) shall cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding, together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(g) "Business day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) "Close of business" on any given date shall mean 5:00 P.M.,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding day
which is a Business Day.
(i) "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or the
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equity securities or other equity interest having power to control or direct the
management, of such Person.
(j) "Current market price" shall have the meaning set forth in
Section 11(d) hereof.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section
1(d) hereof.
(m) "Exchange Ratio" shall have the meaning set forth in Section
11(r)(i) hereof.
(n) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Independent Director" shall mean any member of the Company's
Board of Directors, while such person is a member of the Board, who (i) is not
an Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii) is
not an employee or officer of the Company or an employee, officer or director of
any Acquiring Person, and (iii) is not a relative or spouse of (A) an Acquiring
Person, (B) any officer or other person employed in a management position with
the Company or with any Acquiring Person or (C) any director of any Acquiring
Person.
(q) "Majority Director Vote" shall mean (whether the reference
relates to a determination, approval or vote of the Board of Directors, the
Company or certain of the directors of the Company) the affirmative vote and
approval of the directors of the Company (duly elected or appointed in
accordance with the Company's By-laws) constituting a majority in number of the
total number of directors then constituting the Company's Board of Directors (as
authorized in accordance with the Company's By-laws); provided, however, that if
a Majority Director Vote is required or taken hereunder (or otherwise pursuant
to this Agreement) at any time on or after a Special Vote Event (as defined
below) shall have occurred, then, in addition to such vote and approval of the
full Board of Directors, the vote and approval of a majority of the Independent
Directors, if any, shall also be required. For purposes of this Agreement, a
"Special Vote Event" shall mean and include either (or the earlier of) (i) the
time any Person becomes an Acquiring Person, or (ii) the date of a change,
resulting from a proxy or consent solicitation, in a majority of the directors
of the Company in office at the commencement of such solicitation, if any Person
who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors of the
Company has determined in good faith) that such Person (or any of its Affiliates
or Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event. To the extent permitted or required under
Delaware law, the authorization and approval of this Agreement by the Company's
Board of Directors shall also constitute the authorization and approval of the
special quorum and vote requirements with respect to the directors of the
Company (including any requirement with regard to a vote by or approval of
Independent Directors), as set forth or provided in this Agreement.
(r) "Person" shall mean any individual, firm, company,
corporation, partnership, trust or other entity.
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(s) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(t) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(u) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(v) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(w) "Right" and "Rights" shall have the meanings set forth in the
recitals at the beginning of this Rights Plan.
(x) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals at the beginning of this Rights Plan.
(z) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(aa) "Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(bb) "Special Vote Event" shall have the meaning set forth in
Section 1(q) hereof.
(cc) "Stock Acquisition Date" shall mean the first date of a public
announcement (which, for purposes of this definition, shall include a report
filed pursuant to the Exchange Act) by the Company or an Acquiring Person that a
Person has become an Acquiring Person.
(dd) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting securities (or
voting power of the voting equity securities or interests) is beneficially
owned, directly or indirectly, by such Person.
(ee) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ff) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(gg) "Triggering Event" shall mean (or, as the case may be, the
earliest of) a Section 11(a)(ii) Event or any Section 13 Event.
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 other Agents or Co-Rights Agents as
it may deem necessary or desirable.
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SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth
day after the Stock Acquisition Date (or, if the tenth day after such date
occurs before the Record Date, the close of business on the Record Date), or
(ii) the close of business on the tenth business day (or such later date as may
be determined by a Majority Director Vote prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the beneficial owner
of shares of Common Stock of the Company aggregating 15% or more of the then
outstanding shares of Common Stock of the Company (including any such date which
is after the date of this Agreement and prior to the issuance of the Rights)
(the earlier of such dates referred to in clauses (i) and (ii) of this sentence
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock of the Company registered in the names of the
holders thereof (which certificates shall be deemed also to be Rights
Certificates) and not by separate certificates, and (y) the Rights (and the
right to receive Rights Certificates) will be transferable only in connection
with the transfer of the underlying shares of Common Stock of the Company
(including a transfer to the Company). As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent, if requested, will send) by first-class, insured, postage prepaid mail,
to each record holder of the Common Stock of the Company as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificate(s), in substantially the
form attached hereto as Exhibit B (the "Rights Certificates"), evidencing one
Right for each share of Common Stock so held (subject to adjustment as provided
herein). In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of the
Distribution Date, the Rights will be evidenced solely by the Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock of the Company as of the
close of business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the transfer (or surrender for transfer) of
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any certificates representing shares of Common Stock outstanding on the Record
Date, with or without a Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Rights shall also be issued (consistent with the provisions of
subsection (a) of this Section 3) in respect of all shares of Common Stock of
the Company which are issued after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date.
Certificates for shares of Common Stock (including, without limitation, any
reacquired shares referred to in the last sentence of this Section 3(c)) which
become outstanding after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
"This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement between
Quest Education Corporation (the "Company") and First Union National
Bank of North Carolina, as Rights Agent (the "Rights Agent"), dated as
of May 14, 1999, as it may be amended from time to time (the
"Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in
the Agreement, such Rights (as defined in the Agreement) will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Agreement, as in effect on the date of
mailing, without charge after the receipt of a written request
therefor. Under certain circumstances set forth in the Agreement,
Rights issued to, or held or beneficially owned by, any Person who
becomes an Acquiring Person (as such terms are defined in the
Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, become null and void."
With respect to such certificate(s) containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock of the Company
represented by such certificate(s) shall be evidenced by such certificate(s)
alone, and the surrender for transfer of any such certificate(s) shall also
constitute the transfer of the Rights associated with the shares of Common Stock
of the Company represented thereby. In the event that the Company purchases or
acquires any Common Stock of the Company after the Record Date but prior to the
Distribution Date, any Rights associated with such reacquired Common Stock of
the Company shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock of
the Company which are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
each be in substantially the form attached hereto as Exhibit B and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Plan, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or
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regulation of any stock exchange or stock quotation or trading system on which
the Rights may from time to time be listed or quoted for trading, or to conform
to usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
and shall entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as shall be set forth therein at the price
per one one-thousandth of a Preferred Share set forth therein (as determined in
accordance with Section 7(b) hereof, the "Purchase Price"), but the number and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate thereof, (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 (or directors, as the case may be) of the Company,
by a Majority Director Vote, has determined, in its sole discretion, is part of
a plan, scheme, arrangement or understanding which has as a primary purpose or
effect the avoidance or circumvention of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person,
or an Affiliate or Associate thereof (as such terms are defined in a
Rights Agreement between Quest Education Corporation (the "Company")
and First Union National Bank of North Carolina, as Rights Agent (the
"Agreement"). Accordingly, this Rights Certificate and the Rights
represented hereby become null and void in the circumstances specified
in Section 7(e) of the Agreement. The Company will mail to the holder
of this certificate a copy of the Agreement, as in effect on the date
of mailing, without charge after the receipt of a written request
therefor."
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer or its
President, either manually or by facsimile signature, and shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually or by facsimile
signature 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 Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by
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any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company authorized to sign such Rights
Certificate, although at the date of the execution of this Rights Plan any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the name and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the earlier of the Redemption
Date and the Final Expiration Date, any Rights Certificate or Rights
Certificates (other than any Right Certificates representing Rights that have
become void pursuant to Section 7(e) hereof or that have been exchanged pursuant
to Section 11(r) hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder
thereof to purchase a like number of shares of one one-thousandths of a
Preferred Share as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Certificates shall make such request in writing delivered
to the Rights Agent and shall surrender the Rights Certificate or Certificates
to be transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably 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 Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights 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 Sections 7(e), 11 and 13 and other provisions
hereof, the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c) and
Section 23(a) hereof), in whole or in part, at any time after the Distribution
Date, upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for each one
one-thousandth of a Preferred Share (or other securities) as to which the Rights
evidenced by such Rights Certificate are exercised, at or prior to the earliest
of (i) the close of business on May 14, 2009 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which the Rights are exchanged as
provided in Section 11(r) hereof (the earliest of (i), (ii) and (iii) being
sometimes herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-thousandth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be $80.00,
and shall be subject to adjustment from time to time as provided in Section 11
or 13 hereof, and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for each share to be purchased upon
exercise of such Rights, as set forth below, and an amount equal to any
applicable transfer tax required to be paid by the holder of such Rights
Certificate, the Rights Agent shall, subject to Section 20(j) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares or
other securities to be purchased (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected, in its
sole discretion, to deposit the total number of shares issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of shares as are to be
purchased (in which case certificates for the shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price and any applicable transfer taxes shall be
made in cash or by certified bank check or cashier's check payable to the
Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of,
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the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Rights Plan to the contrary,
from and after the occurrence of a Section 11(a)(ii) Event, any Rights that are
or were acquired or beneficially owned by an Acquiring Person (or any Associate
or Affiliate of such Acquiring Person) or an Acquiring Person Transferee (as
such term is defined below in this Section 7(e)), shall be and become null and
void without any further action, and no holder of such Rights (or of Rights
Certificates evidencing such Rights) shall have any rights whatsoever with
respect to such Rights (including, without limitation, any rights to exercise
such Rights), whether under any provision of this Rights Plan or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or any other Person as a result
of its failure to make any determinations with respect to an Acquiring Person or
their respective Affiliates, Associates or Acquiring Person Transferees
hereunder. No Rights Certificate(s) shall be issued pursuant to Section 3 hereof
that represents Rights beneficially owned by an Acquiring Person (or any
Associate or Affiliate thereof or any Acquiring Person Transferee) whose Rights
would be null and void pursuant to the preceding sentence; in addition, no
Rights Certificate(s) shall be issued at any time upon the transfer of any
Rights to an Acquiring Person (or any Associate or Affiliate thereof or any
Acquiring Person Transferee) whose Rights would be null and void pursuant to the
preceding sentence; and any Rights Certificate(s) delivered to the Rights Agent
for transfer to an Acquiring Person (or any Associate or Affiliate thereof or
any Acquiring Person Transferee) whose Rights would be null and void pursuant to
the preceding sentence shall be cancelled. For purposes of this Agreement, the
term "Acquiring Person Transferee" shall mean and include, with respect to
Rights (whether or not attached to shares of Common Stock), (i) a transferee of
an Acquiring Person (or of any Associate or Affiliate of such Acquiring Person)
who becomes a transferee after the Acquiring Person becomes such, or (ii) 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 the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors of the Company has
determined, in its sole discretion, is part of a plan, scheme, arrangement or
understanding which has as a primary purpose or effect the avoidance or
circumvention of this Section 7(e).
(f) Notwithstanding anything in this Rights Plan to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange
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shall, if surrendered to the Company or 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 Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Rights Plan. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) Subject to the Company's rights in Section 11(q) or elsewhere
herein to otherwise fulfill its obligations hereunder, the Company covenants and
agrees that, from and after the Distribution Date, it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that, as
provided in this Rights Plan, will be sufficient to permit the exercise in full
of all outstanding Rights; provided, however, that the Company shall not be
required to reserve and keep available shares of Common Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth in Section 11(a)(ii) or Section 13 hereof
unless the Rights become exercisable pursuant to such adjustments.
(b) So long as the Common Stock is listed on any national
securities exchange or listed or registered for quotation on any other market
(including, without limitation, the NASDAQ Stock Market ("NASDAQ")), the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all Preferred Shares and/or other securities issuable
pursuant to outstanding Rights to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable and as required by law following the Distribution Date, a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration or termination of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
or periods of time from time to time, not to exceed ninety (90) days in the
aggregate after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Rights Plan to the contrary, the Rights
shall not be exercisable in any jurisdiction unless or until the requisite
qualification in such jurisdiction shall have been obtained.
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(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure 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 therefore), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for shares issued upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of shares in respect of a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
shares in a name other than that of the registered holder upon the exercise of
any Rights until such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for a number of Preferred Shares or shares of Common Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such shares
represented thereby on, and such certificates shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the share transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the share transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a shareholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote (or
consent with respect thereto), to transfer, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any meeting or proceeding of the Company, except as
provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE; NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS; EXCHANGE OF RIGHTS FOR SHARES OF COMMON STOCK. The Purchase
Price, the number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) or Section 7(e) hereof, the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
appropriately
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and proportionately adjusted (including applicable adjustments under paragraph
(p) of this Section 11) so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, 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
stock transfer books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of any Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In the event that, at any time after the Rights
Dividend Declaration Date, any Person shall become an Acquiring Person (such
event being referred to herein as a "Section 11(a)(ii) Event"), then, subject to
Sections 11(r) and 23(a) and except as otherwise provided in this Section 11,
each holder of a Right (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, in accordance with the terms of this
Agreement, upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a Preferred Share for
which the Right is then exercisable, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right was exercisable immediately prior to the first occurrence of
the Section 11(a)(ii) Event, and dividing that product by (y) 50% of the then
current market price (as determined pursuant to Section 11(d) hereof) per share
of the Common Stock of the Company on the date of the occurrence of such Section
11(a)(ii) Event. In the event that there shall not be sufficient shares of
Common Stock authorized or available for issuance to permit the exercise in full
of the Rights in accordance with this Section 11(a)(ii), the Company shall take
all such action as may be necessary to authorize additional shares of Common
Stock for issuance upon exercise of the Rights. In the event the Company shall,
after good faith effort, be unable to take all such action as may be necessary
to authorize such additional shares of Common Stock, the Company shall
substitute, for each share of Common Stock that would otherwise be issuable upon
exercise of a Right, a number of Preferred Shares or fraction thereof such that
the current market price (as defined in paragraph (d) below) of one Preferred
Share multiplied by such number or fraction is equal to the current market price
of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof. In the event that any Person shall become an Acquiring Person
and the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights as provided under this Agreement.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Common Stock (or shares having the same
rights, privileges and preferences as the shares of Common Stock ("equivalent
common stock")) or securities convertible into Common Stock or equivalent common
stock at a price per share of Common Stock or per share of equivalent common
stock (or having a conversion price per share, if a security convertible into
Common Stock or equivalent common stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per
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share of Common Stock on such record date, the Purchase Price to be in effect
after such record date, shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding on such record
date, plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock and/or equivalent common
stock 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 the denominator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of additional shares of
Common Stock and/or equivalent common stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Common Stock owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and 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 fix a record date for a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Common Stock, and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per share of Common
Stock; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. 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 be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, the "current
market price" per Preferred Share (subject to the second paragraph of this
paragraph (d)) or share of Common Stock (or per share of any other security) on
any date shall be deemed to be the average of the
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daily closing prices per share of such security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current market price per
share of the security is determined during a period following the announcement
by the issuer of such security of (A) a dividend or distribution on such
security payable in shares of such security or securities convertible into
shares of such security (other than the Rights), or (B) any subdivision,
combination or reclassification of such security, and prior to the expiration of
the requisite thirty (30) Trading Day period after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the security in question is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the security is
listed or admitted to trading or, if the security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the security in question is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the security selected by the Board of Directors
of the Company. If on any such date no market maker is making a market in the
security, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the security in question is listed or admitted to trading is open for the
transaction of business or, if the security is not listed or admitted to trading
on any national securities exchange, a Business Day. If the security is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes of this
Rights Plan.
For the purpose of any computation hereunder, the "current market
price" per Preferred Share shall be determined in accordance with the preceding
paragraph. However, if the Preferred Shares are not publicly traded, the
"current market price" of a Preferred Share shall be conclusively deemed to be
the current market price per share of the Common Stock as determined pursuant to
the preceding paragraph (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one thousand.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1.0%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one-millionth of a Preferred Share or
one-thousandth of a share of Common Stock or other share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of
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(i) three (3) years from the date of the transaction which requires such
adjustment, or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares or fraction of a share of capital
stock other than Common Stock, thereafter the number or fraction of such other
shares so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the 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 or otherwise hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of (or fraction
of) Preferred Shares or shares of Common Stock or other securities 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
one one-thousandths of a Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths
of a Preferred Share covered by a Right immediately prior to this adjustment, by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights, in lieu of any adjustment
in the number of one one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share of Common Stock 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-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights 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 Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement
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for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights 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 Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then stated or par
value, if any, of the Preferred Shares issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such number of duly authorized, fully paid and nonassessable Preferred Shares
(or shares of Common Stock or other securities issuable thereunder, as the case
may be) at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or shares of Common Stock or other capital stock
or securities of the Company, if any, issuable upon such exercise over and above
the number of Preferred Shares or shares of Common Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due ββββ or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors of the Company shall determine in good
faith by a Majority Director Vote to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash
of any shares of Common Stock at less than the current market price, (iii)
issuance wholly for cash of shares of Common Stock or securities which by their
terms are convertible into or exchangeable for shares of Common Stock, (iv)
stock dividends, or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Common Stock
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other
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Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale 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 (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof or
otherwise specifically permitted by this Rights Plan, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Rights Plan to the contrary notwithstanding,
in the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, then, (A) in
any such case the Purchase Price shall be adjusted by multiplying the Purchase
Price in effect prior to such occurrence by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately before such
event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and (B) each share of Common Stock
outstanding immediately after such event shall have issued with respect to it
that number of Rights which each share of Common Stock outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(q) In lieu of issuing shares of Common Stock (and/or Preferred
Shares) in accordance with Section 11(a)(ii) hereof, the Board of Directors may,
if the number of shares of Common Stock which are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the
Board of Directors shall, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, (A)
determine the value of the shares of Common Stock (the "Adjustment Shares")
issuable upon the exercise of a Right immediately after the adjustments provided
for in Section 11(a)(ii) (the "Current Value"), and (B) with respect to each
Right (other than Rights which have become void pursuant to the provisions
hereof), make adequate provision to substitute for any or all such Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) other
equity securities of the Company (including, without limitation, shares,
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or units of shares, of preferred stock which are deemed in good faith by the
Board of Directors to have substantially the same value as shares of Common
Stock (such shares or units of shares of preferred stock are herein called
"Common Stock equivalents")), (3) debt securities of the Company, (4) other
assets, (5) a reduction of the Purchase Price, or (6) any combination of the
foregoing having a value which, when added to the value of the shares of Common
Stock (and/or Preferred Shares) actually issued upon exercise of such Right,
shall have an aggregate value equal to the Current Value, where such aggregate
value has been determined in good faith by the Board of Directors based upon the
advice of a nationally recognized independent investment banking firm selected
in good faith by the Board of Directors; provided that if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the date (the "Section 11(a)(ii) Trigger
Date") which is the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and Preferred Shares and
then, if necessary, cash, which shares and cash have an aggregate value equal to
the excess of (x) the Current Value over (y) the Purchase Price for the number
of shares (or fraction of a share) for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event. If, upon the
occurrence of a Section 11(a)(ii) Event, the number of shares of Common Stock
that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof, and if the Board of Directors shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, then, if the Board of Directors so elects, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such additional
shares (such thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that some
action must be taken pursuant to the first or second sentence of this Section
11(q), the Company (x) shall provide, subject to Section 7(e) hereof and the
last sentence of this Section 11(q), that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such times as the
suspension is no longer in effect. For purposes of this Section 11(q), the value
of the Common Stock shall be the current market price per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit value
of any "Common Stock equivalent" shall be deemed to equal the current market
price per share of the Common Stock on such date. The Board of Directors may,
but shall not be required to, establish procedures to allocate the right to
receive Common Stock upon the exercise of the Rights among holders of Rights
pursuant to this Section 11(q).
(r) (i) The Board of Directors of the Company may, at its
option upon approval by a Majority Director Vote, at any time after any Person
becomes an Acquiring Person, exchange shares of Common Stock for all or part of
the then outstanding and exercisable Rights
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(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof), at an exchange ratio of one (1.0) share of Common Stock
per Right, appropriately adjusted to reflect any adjustment in the number of
Rights pursuant to Section 11(a)(i) hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Stock for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.
(ii) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to paragraph (i) of
this Section 11(r) 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 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 void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(iii) In the event that there shall not be sufficient
shares of Common Stock available for issuance to permit any exchange of Rights
as contemplated in accordance with this Section 11(r), the Company shall either
take such action as may be necessary to authorize additional shares of Common
Stock for issuance upon exchange of the Rights or, alternatively, at the option
and in the sole discretion of the Board of Directors (or directors, as the case
may be), approved by a Majority Director Vote, in lieu of issuing Common Stock
in exchange for each such Right, (x) pay cash in an amount equal to the Current
Value (as hereinafter defined), (y) issue debt or equity securities or a
combination thereof (which may include Preferred Shares), having a value equal
to the Current Value, where the value of such securities shall be determined by
the Board of Directors in good faith based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors, or (z)
deliver any combination of cash, property, Common Stock and/or other securities
having a value equal to the Current Value (again, where the value of such
securities shall be determined by the Board of Directors in good faith based
upon the advice of a nationally recognized investment banking firm selected by
the Board of Directors). For purposes of this paragraph (iii) only, the term
"Current Value" shall mean the product of the current market price per share of
Common Stock (determined pursuant to Section 11(d) as of the Stock Acquisition
Date) multiplied by the number of shares of Common Stock for which the Right
otherwise would be exchangeable if there were sufficient shares available. To
the extent that the Company determines that some action need be taken pursuant
to clauses (x), (y) or (z) of this paragraph (iii), the Board of Directors may
temporarily suspend the exercisability of the Rights for a period of up to
ninety (90) days following the Stock Acquisition
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Date, in order to seek any authorization of additional shares of Common Stock
and/or to decide the appropriate form of distribution to be made pursuant to
this paragraph (iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with the transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein and shall not be
obligated or responsible for calculating any adjustment nor shall it be deemed
to have knowledge of any such adjustment unless and until it shall have received
such a certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer)
in one transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case, proper
provisions shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof, in accordance with the terms of this Rights Plan, such number
of duly and validly authorized and issued, fully paid, nonassessable and freely
tradable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-thousandths
of a Preferred Share for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event, and dividing that product (which
product, following the first occurrence of a Section 13 Event, shall be the
aggregate "Purchase Price" for all the securities that may be purchased pursuant
to the Right upon the adjustment pursuant to this clause (i) and for all
purposes of this Rights Plan) by (2) 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party (i.e., the issuer of such shares)
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shall thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this Rights
Plan; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with the provisions of this Rights
Plan) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause
(z) of the first sentence 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; 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 twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer (or any other transaction constituting a Section 13
Event) unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale of assets (or any other transaction constituting a Section 13
Event), the Principal Party will:
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
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(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a). The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would be
otherwise issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For 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 of the Rights for any day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than integral multiples of one one-thousandths of a
Preferred Share) or fractions of shares of Common Stock or other securities upon
exercise or exchange of the Rights or to distribute certificates which evidence
such fractional shares. In lieu of fractional shares of Common Stock or
Preferred Shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised or exchanged as herein
provided an amount in cash equal to (A) in the case of fractional Common Stock,
the same fraction of the current market value of a share of Common Stock and (B)
in the case of a fractional portion of a Preferred Share, the same fraction of
the current market value of one Preferred Share. For purposes of this Section
14(b), the
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current market value of a share shall be the closing price of such share (as
determined pursuant to Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise or exchange of a Right, except as permitted by
this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Plan are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate and in this Rights
Plan. Without limiting the foregoing or any remedies available to the holders of
the Rights, it is specifically acknowledged that the holders of the Rights would
not have an adequate remedy at law for any breach of this Agreement, and shall
be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
acceptance of 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) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a Rights
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
Rights 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, subject to the second sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Rights Plan to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Rights Plan by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule,
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regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligations.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote (or consent
with respect to), receive dividends or be deemed for any purpose whatsoever the
holder of any Preferred Shares (or any portion thereof) or shares of Common
Stock or of 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 Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings, proceedings
or other actions affecting shareholders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Rights Plan and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent, its directors,
officers, employees and agents for, and to hold each of them harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent or such other indemnified
parties, for anything done or omitted by the Rights Agent or such other
indemnified parties in connection with the acceptance and administration of this
Rights Plan.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Plan or the performance of the
Rights Agent's duties hereunder in reliance upon any Rights 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 to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
(c) The indemnity provided in this Section 18 shall survive the
expiration of the Rights and the termination of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor
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Rights Agent shall be a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Plan without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Rights Plan any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Rights Plan.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Rights Plan.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Plan upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel acceptable to
the Company (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 as to any action taken 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 Rights
Plan the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Rights Plan in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Plan 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 Rights Certificate (except its
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countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Plan or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment (except with respect to the
exercise of Rights evidenced by Rights 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 Common Stock to be issued pursuant to this Rights Plan or any Rights
Certificate or as to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(e) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Plan.
(f) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(g) The Rights Agent and any shareholder, 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 Rights Plan. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct as long as the Rights Agent was not grossly negligent and
acted in good faith, in the selection and continued employment thereof.
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(i) No provision of this Rights Plan shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(j) If, with respect to any Rights 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 consulting with the Company.
(k) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(l) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights Plan
upon sixty (60) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock or Preferred Shares, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to the transfer agent of the Common Stock
or Preferred Shares, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of sixty (60) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of any state of the United States, in
good standing, which is authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. 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 and records 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
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Rights Agent and each transfer agent of the Common Stock and Preferred Shares
and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Rights Plan or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Rights Plan. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, as
approved by a Majority Director Vote, at any time prior to the earlier of (i)
the time that any Person becomes an Acquiring Person, or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.005 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights pursuant to
this Section 23(a) may be made effective at such time, on such basis and with
such conditions as the Board of Directors of the Company, in its sole
discretion, may establish (as approved by a Majority Director Vote).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books of
the Transfer Agent for the Common Stock; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the
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holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 11(r) hereof, and other than in
connection with the purchase of shares of Common Stock prior to the Distribution
Date.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the holders of
Common Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Common
Stock 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 (other
than a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock, 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 (20) days prior to the
record date for determining holders of the shares of Common Stock for purposes
of such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock whichever
shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Common Stock shall be deemed thereafter
to refer, if appropriate, to other securities.
(c) The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote on any such action.
SECTION 25. NOTICES. Notices or demands authorized by this Rights Plan
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall
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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:
Quest Education Corporation
ββββ βββββββ ββββ, βββββ βββ
βββββββ, ββ βββββ
Attention: President
Subject to the provisions of Section 21, any notice or demand
authorized by this Rights Plan to be given or made by the Company or by the
holder of any Rights 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:
First Union National Bank
ββββ ββββ β.β. ββββββ βββββββββ, βββ
βββββββββ, βββββ ββββββββ βββββ-ββββ
Attention: Shareholder Services Group
Notices or demands authorized by this Rights Plan to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage pre-paid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. The Company may, and the Rights
Agent shall if the Company so directs, from time to time, supplement or amend
this Agreement without the approval of any holder(s) of Rights Certificates in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
or to make, change or effect any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be approved by a Majority Director Vote and evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that, from and
after such time as any Person becomes an Acquiring Person, this Agreement shall
not be amended in any manner which would adversely affect the interests of the
holders of Rights. Without limiting the foregoing, the Company may, at any time
prior to such time as any Person becomes an Acquiring Person, amend this
Agreement to lower the percentage thresholds set forth in Sections 1(a) and 3(a)
hereof to not less than the greater of (a) the sum of .001% and the largest
percentage of the outstanding shares of Common Stock then known by the Company
to be beneficially owned by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any Subsidiary of
the Company, or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan) and (b) 10.0%. 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 Rights Plan to the contrary, no supplement or amendment may be
made after the time that any Person becomes an Acquiring Person unless such
supplement or amendment (i) does not adversely affect the interests of the
holders of Rights, and
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(ii) is approved by a Majority Director Vote, and no supplement or amendment
that materially changes the rights or duties of the Rights Agent under this
Agreement shall be effective without the execution of such supplement or
amendment by the Rights Agent.
SECTION 27. SUCCESSORS. All the covenants and provisions of this Rights
Plan 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 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Rights Plan, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (where
specifically provided for herein, by the requisite vote and/or with the approval
of Independent Directors (where a Majority Director Vote is required)) shall
have the exclusive power and authority to administer this Rights Plan and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the approval of Independent Directors (where a
Majority Director Vote is required)) or to the Company, or as may be necessary
or advisable in the administration of this Rights Plan, including, without
limitation, the right and power to (i) interpret the provisions of this Rights
Plan and (ii) make all determinations deemed necessary or advisable for the
administration of this Rights Plan (including a determination to redeem or not
redeem the Rights, to exchange the Rights or to amend or supplement this Rights
Plan). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with, where specifically
provided for herein, the approval of Independent Directors (where a Majority
Director Vote is required)) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject the Board or the Independent Directors (if
applicable) to any liability to the holders of the Rights.
The Board may at any time and from time to time (and upon the
occurrence of a Triggering Event shall forthwith) establish and set aside one or
more funds (in such amount or amounts as the Board shall deem necessary or
desirable), whether in trust, escrow or other segregated accounts (regardless of
whether any such fund is combined for administrative purposes with any other
fund or funds established by the Company, for the purpose of assuring that
adequate resources are available to the Board of Directors (or Independent
Directors, as the case may be), to enable them to carry out their prescribed
functions, and to maintain their authority and powers, under this Agreement, or
to fulfill their fiduciary obligations to the shareholders of the Company.
Without limiting the generality of the statement of purposes contained in the
next preceding sentence, the fund or funds so established shall, on demand of a
majority of the Board or Independent Directors, be made available to the Board
(including Independent Directors) for the purposes of (i) seeking affirmatively
to establish, or to defend, the validity of this Agreement, including, without
limitation, this Section 28, and (ii) seeking affirmatively to establish, or to
defend, the validity and/or propriety of any action taken (or omitted to be
taken) by the Board (including Independent Directors) pursuant to this
Agreement, the Certificate of Incorporation or the Bylaws or applicable
provisions of the Delaware General Corporation Law. The establishment by the
Board, and utilization by the Board of Directors (or Independent Directors, as
the case may be), of any fund or funds established pursuant to this paragraph
shall be separate
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and apart from, and shall not detract from, diminish or otherwise affect
adversely, any rights or protections afforded, conferred or given to the
Company's Directors (including the Independent Directors) pursuant to the
Certificate of Incorporation or Bylaws of the Company.
SECTION 29. BENEFITS OF THIS RIGHTS PLAN. 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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Without limiting the foregoing, if any provision requiring that a determination,
vote or approval be made by less than the entire Board (or at a time or with the
concurrence of a group of directors consisting of less than the entire Board) is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, such determination, vote or approval shall then be made by the
full Board of Directors in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws.
SECTION 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 32. CONSENT TO JURISDICTION; SERVICE OF PROCESS. The Company,
the Rights Agent and the holders of the Rights Certificates hereby irrevocably
submit to the jurisdiction of the state or federal courts located in New Castle
County, Delaware in connection with any suit, action or other proceeding arising
out of or relating to this Rights Plan and the transactions contemplated hereby,
and hereby agree not to assert, by way of motion, as a defense, or otherwise in
any such suit, action or proceeding that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Rights Plan or the subject matter hereof may
not be enforced by such courts.
SECTION 33. COUNTERPARTS. This Agreement may be executed in
counterparts and both of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Plan are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 35. CONSEQUENTIAL DAMAGES. Neither party to this Agreement
shall be liable to the other party or any third party for consequential damages.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights Plan to
be duly executed and attested, all as of the date first above written.
QUEST EDUCATION CORPORATION
By: /s/ββββ β. ββββββ
--------------------------------------------
ββββ β. ββββββ
President and Chief Executive Officer
FIRST UNION NATIONAL BANK
By: /s/ βββββββ βββββββ
----------------------------------------------
Name: βββββββ βββββββ
--------------------------------------------
Title: Vice President
------------------------------------------
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EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
QUEST EDUCATION CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------
Quest Education Corporation, a corporation organized and existing under
the Delaware General Corporation Law (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation pursuant to Section 151 of the Delaware General
Corporation Law at a meeting duly called and held on __________________, 1999.
Pursuant to the authority granted to and vested in the Board of
Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Corporation's Certificate
of Incorporation, the Corporation hereby creates a series of Preferred Stock,
par value $0.01 per share, of the Corporation (the "Preferred Stock"), and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be ____________ thousand (______). Such number of shares
may be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series A Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock, par
value $.01 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of
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41
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
2
42
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or
3
43
winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, and further provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of
4
44
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class. At any time when there are no shares of Series A
Preferred Stock outstanding, the number, designation, preferences and rights of
the Series A Preferred Stock as set forth in this Certificate of Designations
may be amended by the Board of Directors in the manner provided in Section 151
and as otherwise permitted under the Delaware General Corporation Law.
Section 11. Fractional Shares. The holder of any fractional share
of Series A Preferred Stock issued by the Corporation shall have the
proportional rights of a holder of a share of Series A Preferred Stock to the
extent of the fractional portion of a share issued. For example, a holder of one
one-thousandth of a share of Series A Preferred Stock would have one
one-thousandth of the rights of a holder of one share of the Series A Preferred
Stock (e.g., the holder of one one-thousandth of a share would have one vote on
matters subject to a vote of holders of the Series A Preferred Stock, as
compared to a whole share which has 1,000 votes).
5
45
IN WITNESS WHEREOF, this Certificate of Designations has been executed on behalf
of the Corporation as of ____________, 1999.
QUEST EDUCATION CORPORATION
By:
-----------------------------------
Name:
Title:
6
46
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
QUEST EDUCATION CORPORATION
Certificate No. R-___________________________________________________ Rights
NOT EXERCISABLE AFTER _____________ , 2009 OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.005 PER RIGHT, AND TO EXCHANGE, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS PLAN) AND ANY TRANSFEREE
OR SUBSEQUENT HOLDER OF THE RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS 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 PLAN). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.](1)
---------------------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
1
47
RIGHTS 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 ________ , 1999 (the "Rights
Plan"), between Quest Education Corporation, a Delaware corporation (the
"Company"), and _______________ (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (New York time) on ____________, 2009 at
the office or offices of the Rights Agent designated for such purpose, or its
successor(s) as Rights Agent, one one-thousandth of a fully paid, non-assessable
share of the Company's Series A Junior Participating Preferred Stock, par value
$0.01 per share (the "Preferred Shares") (or in certain circumstances, cash,
property or other securities), at a purchase price of $_____ per one
one-thousandth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The Purchase Price shall be paid in cash.
The number of Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of ____________, 1999, based on the Company's Common Stock and Preferred Shares
as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Plan), if the Rights evidenced by this Rights Certificate
are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Plan), or (ii) an Acquiring
Person Transferee (as such term is defined in the Rights Plan), such Rights
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Plan, the Purchase Price and the number and
kind of shares of the Company's capital stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Plan).
This Rights Certificate, and the Rights evidenced hereby, are subject
to all of the terms, provisions and conditions of the Rights Plan, which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which Rights Plan reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder and thereunder of the Rights Agent, the Company and the
holders of the Rights Certificates, which limitations of rights include (without
limitation) the temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Plan. In the event of any
conflict or inconsistency between the terms, provisions and conditions of Rights
as set forth in the Rights Plan and those described or set forth in this Rights
Certificate, the terms, provisions and conditions set forth in the Rights Plan
shall govern and prevail. Copies of the Rights Plan are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
2
48
If this Rights Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised. This Rights
Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Preferred Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase.
Subject to the terms, provisions and conditions of the Rights Plan, the
Rights evidenced by this Certificate (i) may be redeemed by the Company at its
option at a redemption price of $.005 per Right or (ii) may be exchanged in
whole or in part for shares of Common Stock. Under certain circumstances set
forth in the Rights Plan, the decision to redeem shall require the concurrence
of a majority of the members of the full Board of Directors and a majority of
any Independent Directors (as such term is defined in the Rights Plan). The
Rights Plan is also subject to amendment and supplement by the Company, on the
terms and conditions set forth in the Rights Plan.
No fractional shares of Common Stock or Preferred Shares (other than
integral multiples of one one-thousandth of a Preferred Share) will be issued
upon the exercise of any Right or Rights evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Rights Plan.
No holder of this Rights Certificate shall be entitled to vote (or
consent with respect to) or receive dividends or be deemed for any purpose the
holder of any Preferred Shares or shares of Common Stock 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 Plan or herein be construed
to confer upon the holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting or proceeding thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Plan), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Plan.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
3
49
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ______________, 19__
ATTEST: ___________________________ QUEST EDUCATION CORPORATION
By: By:
-------------------------------- --------------------------------
Name: Name:
Title: Title:
Countersigned:
[RIGHTS AGENT]
By:
--------------------------------
Authorized Signature
4
50
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED __________________________________________ hereby sells,
assigns and transfers unto_____________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together will all right, title and interest therein,
and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: , 19
------------------- --
----------------------------------
Signature
Signature Guarantee:
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. Signatures must be
guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States.
5
51
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, an Acquiring Person Transferee or an Affiliate or Associate thereof (as
such terms are defined under the Rights Plan);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was or subsequently became an
Acquiring Person, an Acquiring Person Transferee or an Affiliate or Associate
thereof (as such terms are defined under the Rights Plan).
Dated: , 19
----------------- --
----------------------------------
Signature
Signature Guarantee:
6
52
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
7
53
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: [Company Name]
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
Dated: , 19
-------------- --
----------------------------------
Signature
Signature Guarantee:
8
54
NOTICE
The signature to the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
9
55
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person, an Acquiring Person Transferee or an Affiliate or Associate thereof (as
such terms are defined under the Rights Plan);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was or became an Acquiring
Person, an Acquiring Person Transferee or an Affiliate or Associate thereof (as
such terms are defined under the Rights Plan).
Dated: , 19
------------------ --
----------------------------------
Signature
Signature Guarantee:
10
56
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
11
57
EXHIBIT C
[QUEST EDUCATION CORPORATION LETTERHEAD]
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
, 1999
---------
To Our Shareholders:
On _______, 1999, your Board of Directors adopted a share purchase rights plan
(the "Rights Plan") and declared a dividend distribution of one right (a
"Right") for each outstanding share of common stock, par value $0.01 per share
(the "Common Stock"), of the Company to shareholders of record at the close of
business on ___________, 1999. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of the Company's Series
A Junior Participating Preferred Stock (the "Preferred Shares") (or in certain
circumstances, cash, property or other securities) at a price of $______ per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. This letter describes the Board's reasons for adopting the Rights
Plan and summarizes certain material terms of the Rights Plan.
Flip-In
In the event that any person or group of affiliated or associated persons
acquires beneficial ownership of 15% or more (or 25% or more in the case of
persons that were 10% or greater holders at the time the Rights Plan was
adopted) of the outstanding shares of Common Stock (an "Acquiring Person"), each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right. Issuances (and consequent beneficial ownership) of
Common Stock (at or in excess of such 15% threshold) by the Company in
connection with certain acquisition transactions effected by the Company and
approved by the Board of Directors are excepted from this provision.
Flip-Over
If the Company is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold after a
person or group has become an Acquiring Person, each holder of a Right (other
than Rights beneficially owned by the Acquiring Person, which will be void) will
thereafter have the right to receive that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
Distribution Date
The distribution date is the earlier of:
(i) 10 days following a public announcement that a person or group
of affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding shares of Common Stock; or
58
(ii) 10 business days (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding shares of
Common Stock.
Transfer and Detachment
Until the Distribution Date, the Rights will be evidenced, with respect to any
of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferred with and only with the
shares of Common Stock, no separate rights certificates will be issued and
transfer of Common Stock certificates will also constitute transfer of these
Rights. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the shares of Common Stock as of the close of business on
the Distribution Date, and such separate Right Certificates alone will
thereafter evidence the Rights.
Exercisability
The Rights are not exercisable until the Distribution Date. The Rights will
expire on _________, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, on the terms and conditions set forth in
the Rights Plan (as described below).
Adjustments
The Purchase Price payable, and the number of Preferred Shares or shares of
Common Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution in the
event of stock dividends, stock splits, reclassifications, or certain
distributions with respect to the Common Stock. The number of outstanding Rights
and the number of Preferred Shares or shares of Common Stock issuable upon
exercise of each Right are also subject to adjustment if, prior to the
Distribution Date, there is a stock split of the Common Stock or a stock
dividend on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock. With certain exceptions, no
adjustment in the Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1.0% in such Purchase Price. No fractional
shares will be issued (other than integral multiples of one one-thousandth of a
Preferred Share) and, in lieu thereof, an adjustment in cash will be made based
on the market price of the Preferred Shares or Common Stock, as the case may be,
on the last trading day prior to the date of exercise.
Preferred Shares
Preferred Shares purchasable upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled to a minimum preferential quarterly
dividend payment of $1.00 per share but will be entitled to an aggregate
dividend of 1,000 times the dividend declared per share of Common Stock. In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $1.00 per share but will be entitled
to an aggregate payment of 1,000 times the payment made per share of Common
Stock. Each Preferred Share
59
will have 1,000 votes, voting together with the Common Stock. Finally, in the
event of any merger, consolidation or other transaction in which Common Stock is
exchanged, each Preferred Share will be entitled to receive 1,000 times the
amount received per share of Common Stock. These rights are protected by
customary antidilution provisions. The value of the one one-thousandth interest
in a Preferred Share purchasable upon exercise of each Right should, because of
the nature of the Preferred Shares' dividend, liquidation and voting rights,
approximate the value of one share of Common Stock.
Exchange
At any time after any person or group becomes an Acquiring
Person, and prior to the acquisition by any such person or group of 50% or more
of the outstanding shares of Common Stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by the Acquiring Person, which
will have become void), in whole or in part, for shares of Common Stock, at an
exchange ratio of one share of Common Stock (or, in certain instances, one
one-thousandth of a Preferred Share) per Right (subject to adjustment).
Redemption
At any time prior to any person or group becoming an Acquiring
Person, the Board of Directors of the Company may redeem the Rights, in whole
but not in part, at a price of $.005 per Right (the "Redemption Price"). If,
however, such redemption is authorized on or after the date of a change,
resulting from a proxy contest or consent solicitation, in a majority of the
directors in office, then such redemption must be approved by a majority of
Independent Directors (as defined in the Rights Plan), if any, and by a majority
of the full board of directors. The redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Amendments
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower the "15%" thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
shares of Common Stock then known to the Company to be beneficially owned by any
person or group of affiliated or associated persons and (ii) 10%, except that
from and after such time when there is an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights, and any amendment
must be approved by a majority of Independent Directors, if any, and by a
majority of the full Board.
Interpretation; Board Approvals
The Board of Directors of the Company has the sole authority to administer the
Rights Plan and to exercise all rights and powers granted to the Board or to the
Company, or as are advisable in the administration of the Rights Plan, including
the power to (i) interpret the provisions of the Rights Plan and (ii) make all
determinations appropriate for the administration of the Rights Plan (including
a determination to redeem or not redeem the Rights, to exchange the Rights or to
amend the Rights Plan). All such interpretations and determinations in good
faith are final and binding on the parties (including the Rights holders) and do
not subject the Board (or the directors) to any liability to the holders of
Rights. In the event a vote, approval or determination of the Board of Directors
(including a determination to redeem or not redeem the Rights, to exchange the
Rights or to amend or supplement the Rights Plan) occurs at any time after
either a Person becomes an Acquiring Person or a change (resulting from a proxy
contest or consent
60
solicitation) in a majority of the directors in office, then such vote, approval
or determination must be approved by a majority of Independent Directors (as
defined in the Rights Plan), if any, and by a majority of the full Board of
Directors.
Rights and Holders
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends.
Further Information
A copy of the Agreement setting forth the Rights Plan has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated ______________, 1999. A copy of the Rights Plan is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Agreement, which is hereby incorporated herein by reference.